HISTORY 


OF  THE 


assachusetts  Savings  Banks. 


BY 


WILLIAM  WOODWARD. 


“  It  is  the  duty  of  rulers  to  make  it  easy  for  the  people  to  do  right, 
and  difficult  to  do  wrong.” — Gladstone. 


Reprinted  from  the  BANKER’S  MAGAZINE  of  New  York. 


NEW  YORK : 

HOMANS  PUBLISHING  COMPANY. 


MASSACHUSETTS  SAVINGS  BANKS. 


<<lt  is  the  duty  of  rulers  to  make  it  easy  for  the  people  to  do 
right  and  difficult  to  do  wrong. ** — Gladstone . 


T  is  a  fact,  well-nigh  universal,  that  those  institutions  and 
organizations  which  have  blessed  humanity  most  widely  have 
been  the  immediate  outgrowth  of  conditions  of  practical  necessity 
on  the  part  of  the  common  people.  Unable,  by  virtue  of  limited 
resources,  to  do  for  themselves  that  which  the  common  weal  has 
imperatively  demanded,  the  interests  and  needs  of  the  masses  have 
always,  and  rightfully,  been  cared  for  and  supplied  either  by  the 
philanthropy  of  individuals  or  by  legislative  decree.  Hence,  this 
fact  in  mind,  it  is  the  occasion  of  no  surprise  to  find,  upon 
investigation,  that  the  Institution  for  Savings  had  its  origin  in  the 
purpose,  on  the  part  of  benevolent  individuals,  to  encourage  habits 
of  frugality  and  thrift  among  the  poor  and  indigent,  in  this  and 
other  countries. 

This  idea,  from  its  inception,  has  been  so  largely  and  gradually 
a  development  from  a  remote  and  but  vaguely  defined  principle, 
th?t  it  is  somewhat  difficult  to  indicate  just  how  and  when  and 
where  it  first  saw  the  light.  It  is  known,  however,  that  among 
the  other  excellent  things  suggested  by  Daniel  Defoe  was  the  pro¬ 
priety  of  providing  for  and  encouraging  small  savings  among  the 
common  people.  This  was  in  1697.  Nearly  a  century  later  we  find 
that  this  idea  had  been  embodied  more  or  less  distinctly  in  certain 
institutions  in  Brunswick  (1765),  Hamburg  (1778),  Oldenburg  (1786) 
Loire  (1790),  Basel  (1792),  Geneva  (1794),  and  Kiel  in  Holstein 
(179  )•  Regarding  these  institutions,  Mr.  Lewins,  in  his  “History 
of  Banks  for  Savings  in  Great  Britain  and  Ireland,”  remarks  • 

“  That,  from  the  best  investigation  I  have  been  able  to  make,  the 
institutions  in  question  were  something  very  different  from  savings 
banks  as  English  people  understand  them,  dealing,  as  they  did,  in 


p2.\ 

\ 


4  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

business  more  like  the  sale  of  deferred  annuities.  The  institution 
at  Hamburg  simply  took  the  spare  cash  of  servants  and  handi¬ 
craftsmen,  and  granted  annuities  on  the  members  arriving  at  a 
certain  age.  No  withdrawal  of  money  was  allowed." 

It  is  Jeremy  Bentham  who  is  credited  with  having  revived  the 
theory  of  Defoe  in  Great  Britain,  when,  in  1797,  he  suggested  what 
was  known  as  the  Frugality  Bank.  His  plans  were  actually  put 
in  practical  operation,  in  1799,  by  Rev.  Joseph  Smith,  of  Wendover, 
who  volunteered  to  receive  from  his  parishioners  any  deposits  of 
money  which  they  might  choose  to  make  with  him  during  the 
summer,  the  same  to  be  returned,  if  desired,  at  Christmas,  with 
the  addition  of  one-third  the  amount,  as  a  bounty  upon  the  frugality 
of  the  depositor. 

In  1798,  a  Mrs.  Priscilla  Wakefield  established  a  “Friendly  Society 
for  the  Benefit  of  Women  and  Children,”  at  Tottenham.  This 
appears  to  have  been,  also,  an  institution  for  the  granting  of 
annuities;  but,  in  1801,  it  united  with  this  original  purpose  a  “fund 
for  loans  and  a  bank  for  savings.”  In  1804,  this  institution  was 
formally  organized  as  a  bank  for  savings. 

Waiving  the  matter  of  the  special  claims  to  priority  preferred 
by  the  adherents  of  any  of  the  persons  mentioned  in  connection 
with  the  founding  of  these  early  institutions  for  savings  as  being 
unimportant  in  this  connection,  we  feel  obliged  to  mention  the 
name  of  Rev.  Henry  Duncan,  minister  at  Ruthwell,  Dumfrieshire, 
Scotland,  as  deserving  special  prominence  in  this  early  history.  For, 
not  only  is  he  known  as  the  founder  of  the  first  savings  bank  in 
Scotland,  in  1810,  but  he  accomplished  more  than  any  other 
individual,  by  making  known  throughout  Great  Britain  the  practical 
value  of  the  system,  and  by  reducing  his  theories  to  a  simple 
working  basis.  He  published  various  papers  on  the  subject,  and 
gave  his  personal  services  in  organizing  similar  institutions  in 
Scotland  and  England.  His  was  the  first  self-sustaining  bank;  and 
it  was  used  as  a  model  for  similar  institutions  for  a  considerable 
period. 

It  should  here  be  observed  that  these  early  institutions  were 
purely  voluntary  in  their  nature,  having  neither  Government  recog¬ 
nition  nor  control.  They  were  dependent  for  support  and  for  credit 
upon  the  public  confidence  in  the  management ;  and  it  is  but  just 
to  say  that  the  confidence  thus  bestowed  was  rarely  abused. 

The  first  savings  bank  in  Great  Britain  authorized  by  Parliament 
was  by  act  of  that  body  passed  August,  1817. 

Inception  in  United  States. 

The  foregoing  history  of  the  early  development  of  the  institu¬ 
tion  for  savings  in  Europe,  and  especially  in  Great  Britain,  has  been 
considered  necessary  to  an  intelligent  understanding  and  appreciation 
of  its  beginnings  in  this  country. 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


5 


The  outcome  of  the  War  for  Independence,  while  in  many  ways 
advantageous  to  the  people,  was,  in  certain  respects,  disastrous  to 
their  immediate  interests.  It  left  them  poor  in  means  and  unsettled 
in  habits  and  principles.  Wages  were  low  and  prices  were  propor¬ 
tionately  high.  The  law  of  self-preservation  seemed  to  actuate  and 
control  individuals  in  their  mutual  intercourse  and  relations.  The 
elements  of  thrift  were  not  a  common  possession  among  the  masses. 
It  was  to  meet  and  to  provide  for  such  conditions  that  the  highest 
intellectual  resources  of  legislators  and  philanthropists  were  called 
into  action. 

To  this  end  it  was  attempted  to  regulate  wages  by  establishing 
by  law  a  minimum  price  for  the  same.  Failing  in  this,  a  similar 
endeavor  was  made  to  fix  the  limit  beyond  which  prices  should 
not  rise  for  the  necessaries  of  life.  The  omnipotence  of  the  law 
of  demand  and  supply  seems  not  to  have  been  recognized  in  any 
of  these  abortive  attempts  to  ameliorate  the  condition  of  the  com¬ 
mon  people.  Later,  and  with  the  sanction  of  the  laws  of  the  States, 
lotteries  were  commonly  established  for  purposes  of  revenue  for 
public  and  charitable  enterprises.  But,  in  all  such  endeavors,  the 
snake  was  only  scorched,  not  killed.  It  still  remained  for  some 
enterprising  and  far-sighted  person  or  persons  to  inaugurate  such 
a  system  of  practical  beneficence  as  would,  slowly  it  may  be,  but 
none  the  less  surely,  educate  the  people  up  to  such  a  condition 
of  self-help  as  would,  in  the  end,  provide  a  satisfactory  solution 
of  the  troublesome  enigma. 

From  this  time  on,  the  progress  of  the  idea  of  providing  for 
and  encouraging  the  savings  of  the  common  people  was  quite  rapid, 
and  coincident  with  the  similar  agitation  in  Europe.  Here,  as 
there,  many  local  and  voluntary  associations  came  into  being  having 
this  idea  more  or  less  distinctly  defined  in  their  articles  of  asso¬ 
ciation.  It  took  but  a  brief  period  to  demonstrate  the  practicability 
of  the  embodied  principles  of  the  system,  although  it  was  equally 
evident  that  other  and  more  effectual  methods  would  be  necessary 
to  place  such  principles  on  a  basis  of  permanency. 

Beginnings  in  Massachusetts. 

The  agitation  grew  apace  in  Massachusetts.  Foremost  among  the 
Colonies  to  recognize  the  common  necessities,  and  to  contribute 
her  proportion  toward  the  support  of  every  enterprise  affecting  the 
well-being  of  the  whole  people,  Massachusetts  did  not  wait  for  a 
leader,  when,  acting  in  her  sovereign  sphere  as  a  State,  she  could 
contribute  anything  toward  the  betterment  of  her  own  citizens. 
Hence,  it  was  simply  in  keeping  with  all  her  antecedents  that 
Massachusetts  should  lead  the  movement  in  favor  of  the  establish¬ 
ment  of  Institutions  for  Savings.  Not  only  was  the  first  of  such 
institutions  under  legal  enactment  in  the  United  States  founded  in 


6 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


Boston,  but  the  Act  of  December  13,  1816,  is,  so  far  as  known, 
the  first  public  act  of  legislation  in  the  world  investing  such  insti¬ 
tutions  with  the  protection  of  law. 

The  Hon.  James  Savage,  of  Boston,  has  credit  for  having  taken 
the  first  active  measures  looking  toward  the  founding  of  a  Bank 
for  Savings  in  Massachusetts.  The  first  public  announcement  of 
the  proposed  plan  was  made  in  the  December  number  of  The 
Christian  Disciple ,  a  religious  paper  published  at  the  time  in  Boston. 
As  announced,  the  purpose  was:  “For  the  security  and  improve¬ 
ment  of  the  savings  of  persons  in  humble  life.” 

That  those  who  had  the  matter  in  charge  were  very  much  in 
earnest,  is  evident  from  the  fact  that,  on  the  thirteenth  day  of  the 
very  month  on  which  the  first  announcement  was  made,  the  act  of 
authorization  was  approved  by  the  Legislature.  Forty-eight  names 
appear  in  the  original  list  of  trustees  of  the  institution — names 
that  have  a  familiar  appearance  to  one  acquainted  with  the  annals 
of  Boston  during  that  period. 

At  the  time  the  Provident  Institution  for  Savings  opened  its 
doors,  the  city  of  Boston  had  a  population  of  between  35,000  and 
36,000.  The  banking  capital  of  the  State  was  $11,475,000,  and  of 
the  nation  $125,000,000.  This  last  fact  is  significant,  as  indicating 
the  comparative  maturity  of  the  general  banking  business  of  the 
country  at  the  inception  of  the  Institution  for  Savings. 

First  Institution  for  Savings. 

The  Provident  Institution  for  Savings,  in  the  town  of  Boston, 
began  business  in  the  spring  of  1817.  It  is  noticeable  that  neither 
in  the  charter  of  this  institution,  nor  in  the  charters  of  similar 
organizations  granted  previous  to  1833,  does  the  word  “bank” 
appear  in  any  instance.  It  is  supposed  that  this  distinction  was 
made,  and  the  term  “Institution  for  Savings”  employed,  for  the 
purpose  of  avoiding  a  certain  sentiment  of  antipathy,  which,  at  the 
time,  appeared  to  be  entertained  toward  the  existing  “banks”  by 
the  common  people. 

The  trustees  of  the  “  Provident  ”  promised  to  divide  to  its  deposit¬ 
ors  one  per  cent,  quarterly,  and  more  if  possible.  The  first  divi¬ 
dend  was  declared  the  1st  of  the  following  July,  according  to 
agreement.  Afterward,  until  January,  1822,  the  quarterly  dividend 
was  one  and  one-fourth  per  cent.,  at  which  time  the  deposits  had 
reached  $600,000,  and  a  surplus  was  held  of  $6,200.  The  quarterly 
dividend  was  then  reduced  to  one  per  cent.,  with  the  purpose  of 
dividing  the  reserve  every  five  years  by  means  of  an  extra  divi¬ 
dend  ;  such  dividend  to  be  apportioned  to  depositors  on  the  basis 
of  the  amount  and  the  time  of  the  deposit.  Out  of  the  then 
existing  surplus  an  extra  dividend  amounting  to  $8,000  was  paid, 
according  to  the  above  plan,  July  1st  following. 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS.  7 

In  1827,  this  institution  appears  to  have  had  $34,000  in  reserved 
profits  on  a  total  deposit  of  $793,000.  At  this  time  a  second  extra 
dividend  was  declared.  In  1832,  the  expiration  of  the  second  period 
of  five  years,  the  number  of  depositors  was  60,500,  and  the  deposits 
$1,442,000.  The  crisis  of  1837  entailed  such  losses  on  this  institu¬ 
tion,  in  common  with  all  others,  that  it  was  unable  to  pay  its 
usual  extra  dividend,  although  it  had  paid  with  commendable 
regularity  the  quarterly  dividend  of  one  per  cent,  through  the 
period. 

The  losses  to  these  institutions  during  the  crisis  of  1837,  suffered 
largely  through  their  investments  in  bank  stock,  either  directly  or 
where  held  as  collateral  for  loans,  reached,  it  is  estimated,  the 

round  sum  of  $275,000. 

Previous  to  the  passage  of  the  general  law,  in  1834,  the  institu¬ 
tions  for  savings  were  subject  to  no  legal  restrictions  save  such 
as  were  imposed  by  the  terms  of  their  respective  charters ;  and, 
moreover,  they  were  permitted  to  institute  such  laws  for  their  own 
government  as  were  not  contrary  to  the  laws  of  the  common¬ 

wealth.  About  the  ‘  only  provision  made  for  the  supervision  and 
inspection  of  these  early  institutions  by  the  Government  was  the 
following,  taken  from  the  charter  of  the  New  Bedford  Bank,  and 
which  is  repeated  in  substance  in  most  of  the  other  charters : 
“  The  officers  and  agents  of  said  institution  shall  lay  a  statement 
of  the  affairs  thereof  before  any  persons  appointed  by  the  Legis¬ 
lature  to  examine  the  same,  whenever  requested  so  to  do,  and 
shall  exhibit  to  them  all  the  books  and  papers  relating  thereto, 
and  shall  submit  to  be  examined  by  them  the  same,  under  oath. 
And  the  Legislature  may,  at  any  time,  make  such  further  regula¬ 
tions  for  the  government  of  said  institution  as  they  may  deem 
expedient,  and  may  alter  or  repeal  this  act  at  pleasure.”  It  is 

very  creditable  to  these  institutions  that  this  provision  of  their 

respective  charters  was  rarely  called  into  effect. 

Between  1816  and  1833  twenty-two  charters  were  granted,  fourteen 
of  this  number  being  granted  subsequent  to  1828.  Two  other  insti¬ 
tutions  were  incorporated,  but  failed  to  take  out  charters.  The  last 
act  of  incorporation,  prior  to  the  passage  of  the  general  laws,  was 
approved  in  March,  1833.  By  it  the  Savings  Bank  for  Freemen, 
in  the  city  of  Boston,  came  into  being.  It  was  at  the  same  ses¬ 
sion  of  the  General  Court  that  authority  was  given  the  Provident 
Institution  to  purchase  real  estate  to  an  amount  not  exceeding 
$30,000. 

Order  of  Bank  Charters. 

Inasmuch  as  those  banks  chartered  previous  to  the  enactment  of 
the  general  law  of  1834  have  an  interest  all  their  own,  by  virtue 
of  their  priority,  it  has  been  considered  desirable  to  name  them  in 


8 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


this  connection.  They  will  be  found  in  the  order  in  which  the 
charters  were  granted  : 

Provident  Institution  for  Savings,  in  the  town  of  Boston,  Decem¬ 
ber  13,  1816. 

Institution  for  Savings,  in  the  town  of  Salem  and  vicinity, 
January  29,  1818. 

Institution  for  Savings,  in  the  town  of  Portland  and  vicinity, 
June  11,  1819;  not  organized. 

Institution  for  Savings,  in  Newburyport  and  vicinity,  January  31, 
1820.  * 

Provident  Institution  for  Savings,  in  the  town  of  Hallowell  and 
vicinity,  February  21,  1820;  not  organized. 

Institution  for  Savings,  in  the  town  of  Roxbury  and  vicinity, 
February  22,  1825. 

New  Bedford  Institution  for  Savings,  June  16,  1825. 

Lynn  Institution  for  Savings,  June  20,  1826. 

Provident  Institution  for  Savings,  in  the  town  of  Taunton  and 
vicinity,  February  26,  1827. 

Springfield  Institution  for  Savings,  June  16,  1827.  Original  charter 
limit,  thirty  years. 

Institution  for  Savings,  in  the  town  of  Haverhill  and  vicinity, 
February  8,  1828. 

Worcester  County  Institution  for  Savings,  in  the  town  of  Worces¬ 
ter,  February  8,  1828. 

Provident  Institution  for  Savings,  in  the  towns  of  Salisbury  and 
Amesbury,  February  20,  1828. 

Fall  River  Institution  for  Savings,  March  11,  1828. 

Plymouth  Institution  for  Savings,  June  11,  1828. 

Lowell  Institution  for  Savings,  February  20,  1829.  Original  char¬ 
ter  limit,  thirty  years. 

Warren  Institution  for  Savings,  in  the  town  of  Charlestown, 
February  21,  1829.  ♦ 

Institution  for  Savings,  in  the  town  of  Barnstable,  January  29, 

1831. 

Provident  Institution  for  Savings,  in  the  town  of  Gloucester  and 
vicinity,  February  3,  1831. 

Dedham  Institution  for  Savings,  March  19,  1831. 

Institution  for  Savings,  in  the  town  of  Newton,  June  17,  1831.' 
Institution  for  Savings,  in  the  town  of  Fairhaven,  February  10, 

1832. 

Weymouth  and  Braintree  Institution  for  Savings,  February  16, 

1833-  * 

Savings  Bank  for  Seamen,  in  the  city  of  Boston,  March  7,  1833  ; 
name  changed  to  Suffolk  afterward. 

As  has  been  stated,  of  these  twenty-four  institutions  as  incor¬ 
porated,  all  but  two  commenced  business,  and  with  the  exception 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


9 


of  the  Taunton,  which  failed  in  1843,  the  Gloucester  in  1844,  and 
the  Barnstable  in  1878,  all  are  in  existence  at  the  present  time. 

To  assist  in  a  more  intelligent  comprehension  of  the  very  remark¬ 
able  progress  of  these  early  institutions,  the  following  table  has 
been  prepared,  giving  the  number  of  depositors  and  the  total 
amount  of  deposits  in  each  institution  in  1834,  and  also  in  1887, 
the  year  of  the  latest  available  returns.  The  Springfield  Institu¬ 
tion  appears  to  have  made  no  returns  in  1834,  owing,  no  doubt, 
to  the  fact  that  its  deposits  were  too  small  to  justify  a  statement. 
Leaving  this  item  out  of  the  calculations  in  1834,  and  also  omit¬ 
ting  the  three  institutions  which  had  failed  prior  to  1887,  is  it 
not,  truly,  a  remarkable  showing,  that  the  number  of  depositors 
increased  from  24,252  to  310,293,  and  the  total  deposits  from 
$3,406,935,  to  the  significant  figure  of  $122,940,940.  The  average 
deposit  in  1834  was  $140,  while  in  1887  it  was  $392. 


Table  Showing  Comparative  Condition  of  Twenty-two 
Savings  Banks  in  1834  and  1887. 


1834. 

1887. 

Date. 

Name. 

Accounts. 

Deposits. 

Accounts. 

Deposits. 

1816. . 

Boston.  Provident . 

IL495 

$1,686,202 

72,955 

$26,897,853 

1833.. 

Boston.  For  Seamen* . 

272 

32.937 

49,292 

20,045,975 

1831.. 

Barnstablef . 

142 

17,160 

— 

— 

1831.. 

Dedham . 

538 

61,166 

5,307 

1,930,266 

1832. . 

Fairhaven . 

102 

9,102 

816 

429,021 

1828. . 

Fall  River . 

335 

46,692 

io,995 

5,459,623 

1831.. 

Gloucester  % . 

240 

20,014 

— 

— 

1828. . 

Haverhill . 

327 

25,73i 

12,075 

4,109,421 

1829. . 

Lowell . . 

1,026 

114,105 

10,846 

3,775,382 

1826. . 

Lynn . 

461 

33,646 

8,348 

2,720,345 

1825. . 

New  Bedford . 

1,162 

207,764 

20,091 

10,413,463 

1820. . 

Newburyport . 

L5I3 

232,460 

0 

"3- 

00 

d 

M 

4,893,275 

1831 . . 

Newton . 

61 

1,829 

6,253 

r, 524,901 

1828. . 

Plymouth . 

703 

91,672 

6,302 

2,i9L455 

1825 . . 

Roxbury  (Boston) . 

668 

83,913 

II,060 

4,017,894 

1818.. 

Salem . 

2,205 

360,852 

16,633 

6,844,981 

1828. . 

Salisbury  and  Amesbury . 

263 

30,557 

5U37 

L739,55o 

1827. . 

Springfield  § . 

— 

23,642 

9,325,298 

1827. . 

Taunton  J  . 

845 

121,938 

— 

— 

1829. . 

Warren  (Boston) . 

622 

62,556 

15,407 

5,958,070 

1833-. 

Weymouth . 

26 

1,097 

L732 

554,773 

1828. . 

Worcester . 

1,246 

165,542 

22,562 

10,109,394 

24,252 

$3,406,935 

3!°, 293  . 

$122,940,940 

*  Name  changed  to  Suffolk.  t  Failed  in  1878.  %  Failed  in  1844. 

%  Not  reported  in  1834;  probably  too  small.  ||  Failed  in  1843. 


IO 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


General  Law  of  1834. 

Up  to  this  time  there  had  little  fault  been  found  with  the 
management  of  the  savings  banks  of  this  State.  A  proper  conser¬ 
vatism,  born,  no  doubt,  of  the  sacred  character  of  the  trust  as 
•regarded  by  the  originators  of  the  institutions,  had  prevailed  in 
the  administration  of  affairs.  But  the  multiplication  of  banks,  which 
became  somewhat  rapid  during  and  subsequent  to  the  year  1828, 
had  suggested  the  propriety  of  a  general  law  regulating  and  con¬ 
trolling  the  affairs  of  all.  Such  a  law  was  passed  April  2,  1834,  at 
which  time,  as  has  been  previously  indicated,  the  total  deposits 
was  $3,406,935  divided  among  24,252  depositors.  The  provisions  of 
this  very  important  act  may  be  briefly  summarized  as  follows  : 

1.  The  officers  were  to  consist  of  a  president,  treasurer,  and  such 
number  of  trustees  as  the  corporators  might  elect,  with  other 
officers  if  needful. 

2.  All  officers,  except  the  treasurer,  were  to  be  chosen  annually 
by  the  corporation  at  such  time  as  the  by-laws  directed ;  the 
treasurer  was  to  be  elected  by  the  trustees,  to  hold  office  at  the 
pleasure  of  said  board. 

3.  The  limit  of  deposits  was  fixed  at  $1,000,  except  such  as 
belonged  to  religious  or  charitable  corporations,  “  said  sums  to  be 
invested,  used,  and  improved  for  the  benefit  of  said  depositors.” 

4.  Deposits  were  to  be  invested  as  follows :  (1)  In  the  stock  of 
any  bank  incorporated  by  a  law  of  the  Commonwealth  or  of  the 
United  States;  such  investment  not  to  exceed  one-half  the  capital 
stock  of  any  bank.  (2)  Deposits  on  time  and  at  interest  in  any 
bank.  (3)  Notes  or  bonds  with  bank  stock  as  collateral  security; 
the  loan  not  to  exceed  ninety  per  cent,  of  the  par  value  of  such 
stock.  (4)  Mortgages  of  real  estate ;  the  total  loan  not  to  exceed 
three-fourths  of  the  whole  amount  of  deposits.  (5)  Public  funds 
of  the  Commonwealth  or  of  the  United  States.  (6)  Notes  of  any 
county,  city,  or  town  of  the  Commonwealth.  (7)  Personal  security, 
with  principal  and  two  sureties  all  residing  in  the  Commonwealth. 

5.  No  officer  or  committee  of  the  corporation  was  allowed  to 
borrow  any  money  thereof.  This  did  not  apply  to  the  trustees. 

6.  All  profits  were  to  be  divided  proportionately  among  the 
depositors  or  their  legal  representatives  after  paying  all  necessary 
expenses.  No  provision  was  made  for  accumulating  a  reserve. 

7.  The  treasurer  was  required  to  make  returns  of  the  condition 
of  the  bank  to  the  Secretary  of  the  Commonwealth,  whenever  so 
requested  by  the  Governor.  The  items  furnished  in  said  returns 
were  to  cover  the  following :  (1)  Number  of  depositors  ;  (2)  amount 
of  deposits  ;  (3)  amount  invested  in  bank  stock ;  (4)  amount  depos¬ 
ited  in  banks  on  interest;  (5)  amount  secured  by  bank  stock;  ( 6 ) 
amount  invested  in  public  funds ;  (7)  loans  on  mortgages ;  (8)  loans 
to  counties,  cities,  and  towns;  (9)  loans  on  personal  security;  (10) 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS.  II 

cash  on  hand;  (u)  total  dividends  for  the  year;  (12)  amount  of 
the  annual  expenses.  In  short,  everything  seems  to  have  been 
required  that  could  by  any  means  throw  light  upon  the  actual 
condition  of  these  institutions.  This  return  had  to  be  sworn  to 
by  the  treasurer  and  five  or  more  trustees,  and  was,  in  due  time, 
laid  before  the  General  Court  by  the  Governor.  An  additional 
safeguard  was  provided  in  subjecting  these  institutions  to  an  exami¬ 
nation  by  a  committee  of  the  Legislature  whenever  desired.  It 
does  not  appear  that  this  provision  was  ever  made  use  of. 

The  first  return  under  the  new  law  was  called  for  and  made 
September  27,  1834.  The  showing  was  as  follows : 


Number  of  Banks .  22 

Number  of  Depositors .  .  24,256 

Amount  of  Deposits .  $3,407,773 

Investments  :  Bank  Stocks .  1,192,097 

Loans  secured  by  Bank  Stocks .  557,93° 

Deposits  in  Banks .  520,669 

Other  investments .  942,923 


It  will  be  observed  that  out  of  a  total  deposit  of  $3,407,773, 
these  institutions  had  invested  in  banks,  in  one  form  or  another, 
$2,270,696,  or  nearly  seventy  per  cent,  of  the  deposits.  It  was 
this  fact,  first  revealed  by  this  return,  that  provoked  unfavorable 
comment  among  those  solicitous  for  the  permanent  well-being  of 
these  institutions.  And,  as  the  crisis  of  1837  soon  afterward  made 
evident,  this  anxiety  was  not  without  foundation. 

During  1834  and  1835,  eleven  new  banks  were  chartered,  making 
the  whole  number  in  operation,  October  29,  1836,  twenty-eight ; 
five  out  of  the  eleven  banks  chartered  not  having  perfected  their 
organization.  During  the  same  period  there  had  been  an  increase 
of  4,500  in  the  number  of  depositors,  and  of  nearly  $1,000,000  in 
the  total  amount  of  deposits. 

Crisis  of  1837. 

The  crisis  of  1837  was  widespread  in  its  effects.  Laying  hold  of 
the  banks  of  discount  with  a  damaging  severity,  it  immediately 
involved  the  savings  banks  in  the  general  collapse.  As  had  been 
expected  and  predicted  by  thoughtful  men,  the  large  holding  of 
bank  stock  by  these  savings  institutions  had  resulted  in  making 
the  general  crisis  more  universal,  and  in  bringing  loss  and  hard¬ 
ship  to  those  not  well  able  to  bear  it,  namely,  the  minors  and 
wage  workers  whose  savings  had  been  confided  to  the  care  and 
keeping  of  such  institutions.  It  not  only  involved  individuals  in 
unexpected  loss,  but  the  collapse  of  so  many  savings  banks  gave 
a  rude  shock  to  public  confidence  in  the  system.  The  losses  to 
stockholders,  resulting  from  the  financial  crisis  of  1837,  have  been 
estimated  in  round  numbers  as  $2,000,000,  while  the  savings  banks 
were  involved,  it  is  estimated,  to  the  extent  of  from  $250,000  to 
$300,000. 


12 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


Changes  of  1838. 

By  an  act  passed  in  February,  1838,  it  was  attempted  to  amend 
and  strengthen  the  general  law  of  1834  by  providing  for  a  regular 
and  more  exact  investigation  of  the  affairs  of  the  savings  banks. 
By  the  appointing  of  three  commissioners  whose  duties  were  to 
visit  the  banks  once  at  least  every  twelve  months,  a  twofold  bene¬ 
fit  was  expected.  First,  a  rigid  examination  by  competent  parties 
was  thus  made  inevitable,  giving  practical  assurance  of  a  proper 
publicity  in  the  internal  affairs  of  these  institutions  ;  and,  secondly, 
such  intimate  acquaintance  with  the  practical  operation  of  the 
system  throughout  the  State  as  would  be  thus  secured,  would 
naturally  result  in  improved  laws  for  the  regulation  of  the  same. 
These  commissioners  were  allowed  the  freedom  of  the  banks  so 
far  as  was  necessary  to  a  complete  and  thorough  examination  of 
all  books  and  accounts.  All  directors,  officers,  and  agents  were 
required  to  furnish  such  additional  information  as  should  be  desired 
by  the  commissioners.  Special  examinations  could  be  ordered  by 
the  Governor  at  his  discretion.  A  majority  of  the  commissioners 
could  at  any  time,  on  sufficient  evidence,  secure  an  injunction  of 
the  Supreme  Judicial  Court  restraining  any  bank,  or,  in  the  last 
event,  to  stop  the  same  from  transacting  business.  They  were 
required  to  make  a  report  of  their  official  proceedings  to  the 
Governor  in  December  of  each  year.  This  law  was  in  force  only 
five  years,  being  repealed  in  March,  1843.  The  powers  conferred 
were  rarely  exercised. 

The  commissioners  appointed  under  the  above  act  were  Waldo 
Flint,  Julius  Rockwell,  and  Jonathan  Shore.  They  made  their  first 
report  December  31,  1838.  It  was  quite  an  elaborate  exposition  on 
the  nature  and  functions  of  the  banks  as  they  were  or  should  be 
conducted.  The  report  filled  forty-five  closely  printed  pages,  and, 
being  about  the  first  literature  upon  the  subject  of  our  local  bank¬ 
ing,  is  very  interesting  and  profitable  reading. 

Investments. 

The  following  is  a  summary  of  the  investments  of  the  banks  of 
the  State  as  they  appeared  at  the  close  of  business  the  last  Satur¬ 
day  of  October,  1838,  according  to  the  above-mentioned  report : 


Bank  stock .  $1,426,188 

Deposits  in  banks .  568,787 

Loans  on  bank  stock .  563,931 

Public  funds .  70,000 

Loans  on  public  funds .  10,000 

Mortgages  of  real  estate .  1,121,300 

City  and  town  loans .  465,247 

Personal  security .  672,117 

Cash  on  hand .  144,162 


$5,04L732 

Here,  again,  it  will  be  noticed  that  the  percentage  of  investments 
in  bank  stocks  in  one  form  or  another  is  somewhat  high,  being 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS.  1 3 

more  than  one-half  the  total  assets.  But,  when  compared  with  the 
report  of  1834,  when  the  average  was  about  seventy  per  cent.,  the 
showing  is  an  entirely  favorable  one. 

The  moral  effect  of  the  crisis  of  1837  upon  the  savings  banks 
of  the  State  cannot  be  better  illustrated  than  by  noting  the  changes 
in  the  character  of  the  loans  during  the  following  decade.  We 
have  at  hand  such  a  comparative  statement,  including  the  years 
1836,  1842,  and  1847. 

Comparative  Statement  of  Investments. 


Security. 

1836. 

1842. 

1847. 

Public  Funds . . 

5,182 

727,518 

357d48 

410,242 

1,192,097* 

520,669* 

1,373,667 

1,919,902 

597,893 

1,050,052 

249,081 

217,066 

2,130,290 

4,132,386 

947,094 

2,053,001 

143,305 

140,540 

Mortgages  of  real  estate . 

County  and  town .  . 

Personal . . . 

Bank  stock . 

Deposits  at  interest . 

Thus  it  will  be  seen  that  what,  at  the  time,  seemed  an  element 
of  weakness  and  was  so  regarded,  namely,  a  too  intimate  relation 
between  the  Institutions  for  Savings  and  the  Banks  of  Discount, 
was,  by  virtue  of  the  calamity  of  1837,  turned  to  good  account 
in  bringing  about  certain  changes  in  those  relations,  not  only  in 
the  line  above  indicated,  but  also  in  other  directions  hereafter  to 
be  noted.  The  rapid  increase  in  the  amount  of  funds  invested  in 
public,  real  estate,  and  personal  securities,  is  of  itself  indicative  of 
a  healthful  advance  in  the  right  direction. 

Further  Progress. 

For  several  years  following  the  crisis  of  1837  there  were  few 
additions  to  the  number  of  banks ;  some  that  were  chartered  did 
not  complete  their  organization,  and  four  were  discontinued.  The 
Institution  for  Savings  in  Taunton,  chartered  in  1827,  failed  in 
1843,  and  finally  closed  up  its  affairs  in  1848,  after  paying  divi¬ 
dends  to  its  depositors  amounting  to  82X  per  cent. 

In  1841,  the  law  was  so  changed  that  savings  banks  were  allowed 
to  loan  money  upon  the  stock  of  Massachusetts  railroads  as  col¬ 
lateral,  when  the  capital  stock  of  such  railroad  was  paid  in  full, 
not  subject  to  mortgage,  and  not  worth  less  than  par  at  the  time 
of  the  loan.  A  loan  was  not  to  exceed  85  per  cent,  of  the  par 
value  of  the  stock,  and  was  in  no  case  to  be  in  excess  of  5  per 
cent,  of  the  deposits.  Investments  of  this  class  were  never  large. 

The  year  1846  witnessed  certain  changes  in  the  law  affecting  the 
returns  required  of  the  banks.  In  addition  to  previous  require¬ 
ments,  the  new  law  called  for  the  following:  (1)  Where  bank  is 

*  In  1834. 


14 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


located;  (2)  amount  of  each  kind  of  public  funds;  (3)  amount  of 
stock  in  specified  banks  ;  (4)  amount  loaned  on  stocks,  the  different 
varieties  to  be  named,  with  amount  of  loan  on  each ;  (5)  amount 
held  in  real  estate  ;  (6)  amount  on  deposit  in  each  and  all  banks  ; 
(7)  rate  and  amount  paid  in  dividends  during  the  past  year,  with 
average  for  past  five  years. 

Another  act  provided  that  a  married  woman  might  give  a  receipt 
for  money  deposited  before  or  subsequent  to  her  marriage,  the 
same  to  be  a  valid  release  to  the  bank.  This  was  the  beginning 
of  legislation  defining  the  rights  and  privileges  of  women  and 
minors  in  their  relations  to  these  institutions ;  and  such  legislation 
has  been  of  inestimable  value. 

An  act  was  passed  in  1847  requiring  such  banks  as  were  closing 
up  their  affairs  to  make  returns  of  the  same  on  the  second  Wed¬ 
nesday  of  January  of  each  year,  under  penalty  of  a  fine  of  $20 
for  each  day’s  neglect  so  to  do. 

Application  of  Law  of  1834. 

By  the  law  of  1834  the  savings  banks  were  required  to  make 
their  returns  to  the  Secretary  of  the  Commonwealth,  who,  in  turn, 
laid  abstracts  of  the  same  before  one  of  the  houses  of  the 
Legislature.  It  had  been  the  custom  to  print  these  abstracts  with 
the  other  documents  of  the  house  before  which  they  were  laid. 
In  1847,  a  different  course  was  taken.  Instead  of  publishing  them, 
they  were  referred  to  the  Committee  on  Banks  and  Banking,  with 
instructions  to  investigate  and  report  in  regard  to  the  manner  in 
which  the  various  laws  had  been  conformed  to  during  the  year. 
The  report  that  followed  brought  to  notice  certain  technical  viola¬ 
tions  of  the  law  concerning  investments,  particularly  investments 
in  the  securities  of  other  States,  and  of  the  cities  of  other  States. 
It  seems  that  the  banks  chartered  previous  to  the  enactment  of 
the  law  of  1834  took  exception  to  the  enforcement  of  the  said  law 
as  against  privileges  conferred  on  them  by  their  respective  charters, 
they  holding,  very  tenaciously,  to  the  opinion  that  their  charter 
rights  could  not  be  lawfully  abridged  by  subsequent  legislation. 
The  controversy  was  long  continued.  At  length  the  Provident 
Institution  of  Boston  took  the  matter  to  the  court  for  settlement. 
The  court  decided  that  the  laws  of  the  State,  being  for  the  good 
of  all,  could  not  be  construed  as  favoring  any,  and  that  all  banks, 
charter  privileges  to  the  contrary  notwithstanding,  must  conform 
to  the  requirements  of  the  general  law. 

Board  of  Commissioners  of  1851. 

The  term  of  the  bank  commissioners,  appointed  in  1838,  having 
expired  in  1843,  the  matter  went  by  default  until  1851,  when  a 
Board  of  Bank  Commissioners  was  created,  having  similar  powers 


HISTORY  OF  THE  MASSACHUSETTS.  SAVINGS  BANKS.  15 

and  duties  to  their  predecessors.  This  board,  however,  was  required 
to  visit  each  bank  once  every  two  years  instead  of  annually,  one- 
half  to  be  visited  each  year,  and  all  new  ones  during  the  first 
year  of  their  existence.  It  was  provided  that  special  examinations 
should  be  made  at  the  instance  of  five  or  more  bank  officers,  or 
of  the  same  number  of  creditors,  instead  of  at  the  request  of  the 
Governor.  These  commissioners  were  to  make  their  returns  to  the 
Secretary  of  the  Commonwealth  annually  in  December,  and  were 
also  required  to  report  all  violations  of  the  law  to  the  Attorney- 
General  for  enforcement. 

It  was  also  provided  that  no  bank  should  be  allowed  to  discount 
a  note  or  bill  of  exchange  on  which  the  name  of  a  bank  com¬ 
missioner  appeared.  In  1858,  this  last  provision  was  amended  so 
as  to  prohibit  said  commissioners  from  becoming  sureties  for 
borrowers.  These  provisions  were  incorporated  into  the  general 
statutes  of  i860  with  slight  changes. 

In  1865,  the  Board  of  Commissioners  was  abolished,  to  take  effect 
January  1,  1 866.  In  April  of  the  same  year  the  office  of  Commis¬ 
sioner  of  Savings  Banks  was  created,  with  the  same  duties  and 
responsibilities  as  the  Board  of  Commissioners,  except  that  exami¬ 
nations  were  to  be  made  annually.  Thereafter,  the  bank  returns 
were  made  to  this  officer  instead  of  to  the  Secretary  of  the  Com¬ 
monwealth.  In  1875,  an  additional  commissioner  was  appointed  to 
assist  in  the  increasing  duties  of  the  office. 

Taxation. 

In  1850,  the  subject  of  the  taxation  of  bank  deposits  began  to 
be  agitated  in  certain  quarters  with  considerable  warmth,  and  a 
petition  was  presented  to  the  House  of  Representatives  asking  for 
legislation  in  this  direction.  The  committee  to  whom  the  matter 
was  referred  made  a  report  in  which  the  situation  as  viewed  by 
them  was  stated  as  follows  :  “  The  act  petitioned  for  would  deter 
people  from  depositing  in  savings  banks,  and  would  weaken  the 
stimulants  and  inducements  to  industry  and  frugality  among  the 
people  of  the  Commonwealth,  and  increase  the  number  of  the  poor, 
the  poor  rates,  and  the  taxes  upon  property  already  subject  to 
taxation,  thus  injuring  many  and  benefiting  none.” 

That  this  view  of  the  situation  was  very  much  distorted  is  quite 
evident  in  the  light  of  later  experience.  The  rights  and  privileges 
of  these  institutions,  as  we  have  seen,  were  guarded  with  most 
jealous  care ;  and  it  is  greatly  to  the  credit  of  those  having  their 
welfare  in  view,  that  a  becoming  prudence  was  always  manifested 
in  giving  sanction  to  anything  that  had  the  semblance  of  innova¬ 
tion.  The  fact,  however,  was  becoming  more  and  more  apparent, 
that  the  Institution  for  Savings  was  no  longer  solely  what  its 
founders  had  intended  to  have  it,  namely,  a  place  where  the  wage 


l6  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

worker  and  other  persons  of  limited  means  might  safely  and  profit¬ 
ably  leave  their  small  accumulations.  The  success  and  reliability 
of  these  institutions  had  begun  to  recommend  them  as  a  means 
of  investment  for  persons  of  fortune.  It  was  this  circumstance, 
more  than  anything  else,  that  brought  about  the  agitation  in  favor 
of  taxation  of  bank  deposits.  It  was  found,  also,  that  the  number 
of  individuals  who  were  taking  advantage  of  the  law  authorizing 
savings  banks  to  loan  on  taxable  securities  were  becoming  daily 
more  numerous  throughout  the  Commonwealth.  The  banks  were 
carrying  a  considerable  amount  of  such  securities  as  collateral  for 
loans,  when,  in  1849,  a  law  was  passed  requiring  them  to  make 
returns  to  the  assessors  of  the  towns  in  which  the  parties  so 
pledging  lived,  of  the  names  of  the  persons  and  the  amounts  held 
for  the  benefit  of  each.  These  returns  were  to  bear  date  May  1st 
each  year. 

In  1851,  a  law  was  passed  covering  the  other  ground  just  referred 
to,  in  so  far  as  it  required  the  treasurers  of  the  banks  to  return 
to  the  towns  of  Massachusetts  an  annual  statement  of  the  amounts 
on  deposit  in  excess  of  $500  belonging  to  the  individuals  named, 
residents  of  said  towns.  These  returns  were  required  to  bear  date 
May  1  st,  and  to  be  forwarded  previous  to  the  10th  day  of  the 

same  month,  under  penalty  of  a  fine  of  fifty  dollars  for  any  neglect 

» 

so  to  do. 

By  a  law  of  April,  1852,  the  above  act  was  supplemented  so  as  to 
permit  an  assessor  of  any  city  or  town  in  the  State  to  call  for 
a  statement,  from  any  savings  institution,  of  the  amounts  to  the 
credit  of  any  residents  of  said  town,  when  said  amounts  were  in 
excess  of  $100.  In  1866,  this  limit  was  changed  to  $200.  Such 
requests  from  assessors  were  to  be  in  writing,  and  could  be  made 
at  pleasure. 

These  provisions  were  but  preliminary  to  the  law  to  which  they 
soon  proved  to  be  an  inadequate  substitute.  They  were  abolished 
in  1862,  and  a  State  tax  of  one-half  per  cent,  on  deposits  substi¬ 
tuted.  In  1863,  the  tax  was  increased  to  three-fourths  per  cent.; 
in  1865,  it  was  reduced  to  one- half,  and  in  1868  raised  again  to 
three-fourths  per  cent.  This  taxation  of  deposits,  while  it  met  with 
strong  opposition  in  certain  quarters,  as  was  to  be  expected,  proved 
to  be  the  most  equitable  adjustment  of  the  interests  of  all  con¬ 
cerned  that  could  have  been  devised.  The  final  tax  of  three-fourths 
of  one  per  cent,  was  only  about  one-half  the  rate  imposed  on  other 
taxable  property — a  discrimination  to  which  no  exception  appears 
to  have  been  taken. 

Five  Cents  Savings  Banks. 

In  the  two  years,  1854  and  1855,  twenty-six  new  banks  were 
organized.  Of  this  number,  twenty  started  on  the  plan  of  receiving 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


17 


deposits  as  small  as  five  cents  at  one  time.  The  main  purpose  of 
this  departure  appears  to  have  been  to  facilitate  deposits  on  the 
part  of  minors.  It  was  to  this  end  that  provision  was  made  to 
enable  minors  to  deposit  and  to  draw  at  will.  While  it  was  an 
idea  new  to  Massachusetts,  the  wisdom  of  the  provision  had  been 
sufficiently  demonstrated  in  England,  where  it  had  been  incorporated 
into  the  general  laws  as  early  as  1817;  and  also  in  the  State  of 
New  York  similar  legislation  had  obtained  since  1820.  This  pro¬ 
vision  was  incorporated  into  the  general  laws  of  this  State  in  May, 
1855- 

Crisis  OF  1857. 

The  financial  and  commercial  reverses  of  1857  were  less  severely 
felt  among  the  banks  than  in  1837.  The  banks  of  discount  were 
on  a  safer  footing  at  this  time,  and  hence,  were  better  able  to 
stem  the  current  of  the  impending  disaster.  The  savings  banks 
were  doubly  assured  of  practical  exemption  from  the  general 
reverses,  from  the  fact  that  great  care  had  been  exercised  since 
1837  in  regulating  the  amount  of  funds  invested  in  bank  stock  in 
any  form  ;  and,  also,  from  the  very  evident  fact  of  the  unusually 
stable  condition  of  these  banks  just  alluded  to.  From  the  follow¬ 
ing  statement  of  the  investments  of  the  savings  banks  in  1858,  it 
will  be  seen  that,  whereas  the  amount  loaned  on  the  credit  of  the 
banks  in  1834  was  70  per  cent.,  and  in  1838  about  50  per  cent., 
at  this  time  it  was  only  about  25  per  cent.  Carrying  the  com¬ 
parison  yet  further,  it  is  instructive  to  notice  that  in  1838  the 
loans  on  mortgages  were  22  per  cent,  of  the  total  loans,  and  in 
1858,  37  per  cent.  The  loans  on  personal  security  in  1838  were 
13  per  cent.;  in  1858,  23  per  cent.;  county  and  town  loans,  1838,  9 
per  cent.;  in  1858,  10  per  cent.;  loans  on  public  funds,  1838,  1^ 
per  cent.;  in  1858,  3  per  cent.  The  official  returns  for  1858  are 
summarized  as  follows : 


Total  deposits .  $33,914,971 


Public  funds .  $1,089,977 

Bank  stock . 6,611,431 

Loans  on  bank  stock .  844,213 

Deposits  at  interest .  1,065,828 

Railroad  stock . 104,363 

Loans  on  railroad  stock .  51,380 

Real  estate .  207,190 

Loans  on  mortgages .  12,514,706 

Loans  to  county  and  town .  3,363,989 

Personal  security .  7,751,265 


$33,604,342 

Commissioners’  Report,  1858. 

The  most  noticeable  feature  of  the  commissioners’  report  for 
1858  is  the  pronounced  position  taken  in  opposition  to  a  too 
intimate  connection  between  the  savings  banks  and  the  banks  of 


l8  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

discount.  In  practice  it  had  become  a  very  common  and  profit¬ 
able  arrangement,  to  open  and  maintain  the  one  in  connection 
with  the  other.  By  this  method  the  necessary  expense  of  office 
rent  was  reduced,  and,  in  many  instances,  the  officers  of  one  being 
the  officers  of  the  other,  an  additional  item,  and  a  very  consider¬ 
able  one,  was  also  saved.  It  was  evident  to  the  commissioners 
that  this  arrangement  was  likely  to  result,  in  the  course  of  time, 
in  evil  to  the  weaker  institution,  which  would  be,  in  nearly  every 
case,  the  savings  bank.  In  fact,  it  had  been  found  in  a  number  of 
instances  that  the  affairs  of  two  institutions  thus  domiciled  were 
very  far  from  being  distinct,  the  one  from  the  other.  And,  in 
the  judgment  of  the  commissioners,  the  tendency  was  inevitably 
in  the  direction  of  confusion  and  of  ultimate  loss  to  the  savings 
banks  where  such  relations  were  permitted.  The  language  of  the 
report  is  as  follows :  “  In  some  instances  we  have  found  cashiers 
of  banks  officiating  also  as  treasurers  of  savings  institutions.  This 
combination  of  duties  we  regard  as  objectionable.  We  think  that, 
as  a  general  rule,  there  should  be  as  little  connection  as  possible 
between  banks  and  savings  institutions.”  The  solicitude  thus 
expressed  found  similar  utterance  in  the  reports  of  succeeding 
commissioners.* 

The  report  also  calls  attention  to  the  fact  that  the  feelings  of 
jealousy  which  had  been  manifested  towards  the  law  of  1834  by 
banks  previously  organized,  in  that  it  had  invaded  and  abridged 
their  charter  privileges,  were  still  conspicuously  manifest  in  certain 
quarters. 

Report  of  1861. 

The  Bank  Commissioners’  report,  made  to  the  Legislature  in  1861, 
has  been  considered  one  of  the  most  valuable  and  suggestive 
documents  ever  laid  before  that  body  on  the  subject  of  the  banks. 
It  presents  a  very  thorough  analysis  of  the  theory,  policy,  and 
practical  operation  of  these  institutions,  besides  giving  comparative 
statistics  of  their  development.  The  commissioners  at  this  time 
were  Geo.  Walker,  J.  F.  Marsh,  and  W.  D.  Forbes. 

Some  of  the  facts  contained  in  this  report  are  of  interest  in  this 
connection ;  particularly  the  figures  representing  the  growth  of  the 
system.  The  number  of  banks  in  1834  was  22  ;  in  i860  there  were 
93,  an  increase  of  fourfold.  In  1834,  the  number  of  depositors  was 
24,256;  in  i860,  230,068,  an  increase  of  848  per  cent.  The  deposits 
in  1834  amounted  to  $3,407,774 ;  but  in  i860  they  were  $45,054,- 

*  At  the  time  of  this  writing  (March,  1889,)  an  adverse  report  is  made  in  the  Legis¬ 
lature  of  Massachusetts  on  the  question  of  separating  the  management  of  national  and  sav¬ 
ings  banks.  This  action  is  a  great  disappointment  to  both  Governor  Ames  and  Bank  Com¬ 
missioner  Chapin,  both  of  whom  have  pointed  out  the  need  of  new  and  stringent  legislation 
in  this  matter,  if  the  State  is  to  maintain  its  cherished  reputation  for  careful  control  of  its 
banking  institutions. 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


*9 


236,  a  significant  increase  of  1,222  per  cent.  The  average  deposit 
in  1834  was  $140.49;  in  i860  it  was  $195.82,  an  increase  of  39^ 
per  cent.  The  average  deposit  to  each  person  of  population  was 
$5.58  in  1834,  and  $36.59  in  i860,  an  increase  of  620  per  cent.  The 
percentage  of  population  as  depositors,  in  1834,  was  1  in  25  ;  in 
i860,  as  1  in  5  4-10.  The  average  expense  of  managing  the  insti¬ 
tutions  for  the  six  years,  1834-9,  was  one-third  of  1  per  cent,  of 
the  deposits ;  for  the  six  years,  1855-60,  it  was  twenty-eight  one- 
hundredths  of  1  per  cent.  The  average  dividend  for  five  years, 
from  1840-44,  was  5X  Per  cent. ;  for  six  years,  from  1855-60,  it 
was  about  6%  per  cent.  During  the  ten  years  from  1850-60,  deposits 
increased  231  per  cent.,  while  the  population  of  the  Commonwealth 
increased  only  24  per  cent.  During  the  same  period  the  valuation 
of  the  State  increased  50  per  cent.,  but  bank  capital  increased  75 
per  cent.  These  figures  indicate  very  clearly  the  relative  growth 
of  population  and  wealth  in  Massachusetts  during  the  given  periods. 
And  what  was  true  in  this  State  was  very  largely  true  in  other 
New  England  States,  as  well  as  in  New  York.  The  accumulations 
were  greatly  in  excess  of  the  advance  in  population. 

The  report  also  points  out  the  fact  that  the  material  advance¬ 
ment  in  this  country  was  much  greater  than  that  in  any  country 
of  Europe ;  and  also,  that  the  laboring  people  of  Massachusetts 
wera  accumulating  money,  in  the  form  of  bank  deposits,  much 
more  rapidly  and  generally  than  was  found  to,  be  the  case  among 
like  classes  in  other  lands. 

At  no  time  previous  to  the  very  exceptional  year  of  i860  was 
there  a  decline  either  in  deposits  or  in  the  number  of  depositors 
in  the  savings  banks  of  this  State.  And  it  is  stated,  as  an  indi¬ 
cation  of  the  greater  relative  resources  of  the  working  people  of 
this  country,  that  the  yearly  fluctuations  of  deposits  have  always 
been  less  severe  and  violent  in  this  country  than  in  England  or 
France. 

Most  prominent  and  important  among  the  suggestions  presented 
in  the  report,  is  the  recommendation  that  the  possible  scope  of 
investments  be  enlarged,  so  as  to  include  the  best  municipal 
securities,  such  as  the  bonds  of  the  cities  of  Portland,  Hartford, 
Providence,  New  York,  and  Albany.  It  will  be  seen  that  this 
suggestion  bore  fruit  in  the  Act  of  1863. 

Conditions  in  1861. 

The  opening  of  the  Civil  War  wrought  many  changes  in  the 
financial  conditions  of  the  country.  The  demand  for  money,  uni¬ 
versal  and  imperative,  was  felt  in  every  community.  The  rates  of 
interest  rose  at  once,  and  quite  decidedly.  Investments  in  public 
funds  became  the  most  attractive  on  the  market,  by  virtue  of  such 
advance.  The  extent  to  which  the  opportunity  was  embraced  by 


20 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


the  banks  is  made  evident  by  an  examination  of  their  returns. 
In  1861,  the  amount  invested  in  public  funds  was  $3,111,148;  the 
maximum  was  reached  in  1868,  when  the  amount  was  $31,987,621. 
Of  this  sum,  $25,488,011  was  in  Government  bonds,  these  having 
been,  during  the  war  period,  a  most  attractive  investment  for  the 
banks. 

Effect  of  Usury  Laws. 

The  usury  laws  of  Massachusetts  had  limited  the  rate  of  interest 
chargeable  in  certain,  cases  so  that  mortgages  of  real  estate  paid 
the  banks  but  six  per  cent.  The  demand  for  money  by  the 
Government  at  higher  rates,  therefore,  wrought  mischief  with  this 
class  of  investments.  The  purpose  of  all  usury  laws  has  been, 
primarily,  to  protect  the  borrower;  and  yet,  was  it  ever  known 
that  such  laws  accomplished  their  purpose  ?  To  the  contrary,  have 
they  not  more  frequently  wrought  untold  hardship  ?  At  this  par¬ 
ticular  juncture,  the  results  of  the  law  were  very  manifest.  The 
Government  offered,  at  the  outset,  interest  at  the  rate  of  7  3-10 
per  cent.,  while  the  rate  on  mortgages  was  unalterably  fixed  by 
law  at  a  maximum  of  six  per  cent.  Very  naturally,  therefore,  bank 
deposits  were  turned  out  of  the  channel  of  real  estate  investments 
into  that  of  public  securities,  consisting,  very  largely,  of  Govern¬ 
ment  bonds.  Persons  of  small  means,  having  only  a  home  wholly 
or  in  part  paid  for,  found  it  nearly  impossible  to  raise  money 
upon  the  same,  in  the  hour  of  necessity,  in  consequence  of  the 
practical  hardship  of  a  law  that  had  been  enacted  ostensibly  for 
their  particular  benefit.  Not  only  did  the  loans  upon  real  estate 
security  not  increase  during  a  period  when  the  demands  for  money 
from  every  quarter  were  unexampled,  but  they  show  an  actual  and 
decided  decline.  In  1862,  the  total  loans  by  the  banks  on  real 
estate  security  amounted  to  $18,408,749;  while  in  1865  they  had 
fallen  to  $15,534,568.  It  was  these  conditions  which  suggested,  and 
rendered  imperative,  the  law  of  May,  1865,  making  it  legal,  for  one 
year  thereafter,  to  contract  for  interest  at  the  rate  of  7  3-10  per 
cent.,  for  a  period  not  to  exceed  one  year.  The  beneficence  of 
this  law  became  so  apparent,  in  contrast  to  the  old  one,  that,  in 
1867,  the  usury  laws  were  finally  repealed. 

The  impulse  immediately  given  to  real  estate  security  for  loans 
was  apparent.  Such  loans  on  the  part  of  savings  banks,  which,  in 
1865,  amounted  to  25  per  cent,  of  their  deposits,  increased  to  60 
per  cent,  in  1875. 

Investments — Act  of  1863. 

The  general  law  of  1834  limited  the  amount  to  be  invested  in 
the  capital  stock  of  any  corporation  to  10  per  cent,  of  the  deposits; 
but  in  no  case  was  such  loan  to  exceed  $100,000.  The  law  of 
1855,  also,  provided  the  same  limit.  By  an  act  of  1863,  this 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


21 


restriction  was  made  to  cover  not  only  investments  in  such  stocks, 

but,  also,  such  loans  as  might  be  made  on  notes,  with  stock  as 

collateral  security.  1 

This  same  act,  also,  provided  for  a  wider  range  of  investments 
for  institutions  for  savings,  by  adding  the  following  securities  :  (i) 
public  funds  of  the  State  of  New  York ;  (2)  bonds  or  notes  of 

New  England  cities;  (3)  first  mortgage  bonds  of  any  railroad  in 

the  State  duly  incorporated,  and  which  had  paid  regular  dividends 
for  two  years  next  preceding  such  investment;  (4)  bonds  of  rail¬ 
roads  which  were  unincumbered  by  mortgage  ;  (5)  notes  of  citizens 
of  Massachusetts  with  the  above  described  stocks  as  collateral ;  or, 
on  pledge  of  stock  of  such  railroads,  at  not  over  eighty  per  cent, 
of  market  value,  or  over  ninety  per  cent,  of  par  value.  These 
provisions,  of  course,  did  not  apply  to  horse  railroads. 

Relations  with  the  National  Banks. 

As  the  National  began  to  succeed  the  State  banks,  the  general 
provisions  regulating  the  legal  relations  between  them  and  the 
savings  banks  for  the  most  part  remained  the  same  as  with  the 
State  institutions.  Strange  to  say,  however,  it  was  provided  that 
no  savings  bank  should  hold,  in  any  form,  the  stock  of  any  such 
bank,  to  an  amount  exceeding  one-fourth  its  capital — the  limit  in 
the  case  of  the  State  institutions  having  been  one-half  the  capital 
stock. 

Real  Estate. 

Previous  to  1870,  the  savings  banks  were  only  allowed  to  invest 
their  funds  in  real  estate  by  special  act  of  the  Legislature.  Such 
authority  had  been  given  in  a  few  instances.  During  that  year  a 
general  law  was  enacted,  allowing  a  bank  to  invest  not  over  ten 
per  cent,  of  its  deposits  in  real  estate  for  banking  purposes,  but, 
in  no  case,  was  the  amount  so  invested  to  exceed  $200,000. 

By  a  law  passed  in  1868,  it  was  provided,  that  real  estate  held 
under  foreclosure,  or,  by  sale  under  provisions  of  the  mortgage, 
or,  upon  judgment  for  debts  due,  or,  upon  settlement  to  secure 
such  debts,  must  be  sold  within  five  years  from  the  date  of 
assuming  such  security. 

Unclaimed  Deposits. 

The  first  act  of  the  Legislature  relating  to  unclaimed  deposits 
was  passed  in  1871.  The  savings  banks  of  this  State  had  had  an 
uninterrupted  career  of  more  than  sixty  years,  during  which  time 
nearly  two  generations  of  depositors  had  passed  away.  It  had 
been  found  that,  in  very  many  cases,  the  banks  were  holding 
money  upon  which  no  claim  had  been  made  for  a  good  many 
years.  Also,  in  numerous  instances,  the  lawful  limit  prescribed  for 
deposits,  and  for  the  accumulation  of  interest,  had  been  reached. 


22 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


necessitating  some  action  whereby  the  parties  interested,  or  their 
legal  representatives,  might  be  brought  to  a  knowledge  of  the  facts. 
The  law  of  1871  was  the  first  step  taken  in  the  matter,  and  seems 
to  have  covered  only  the  matter  of  excessive  interest.  It  provided 
for  public  notification  through  the  papers,  once  in  five  years,  of 
the  names  of  the  parties  interested,  with  the  last  known  residence 
of  each,  and  of  the  sums  held,  over  and  above  the  amount  on 
which  interest  was  allowed. 

In  May,  1887,  an  act  was  passed  providing  for  this  matter  more 
in  detail.  It  demands  that  within  fifteen  days  after  the  last  busi¬ 
ness  day  of  October,  1887,  the  treasurer  of  each  savings  bank  shall 
return  to  the  Commissioners  of  Savings  Banks  a  sworn  statement 
containing  the  names,  amounts  to  the  credit,  the  last  place  of 
residence  or  post  office  address,  together  with  the  fact  of  the 
death — if  known  to  the  treasurer — of  depositors  who  shall  have 
made  or  withdrawn  no  part  of  their  deposit  within  the  twenty 
years  next  preceding.  The  treasurer  is  also  to  give  public  notice 
of  the  above  facts  through  the  papers  once  a  week  for  three 
weeks  in  succession.  These  requirements  do  not  apply  to  persons 
known  to  be  living,  or  to  accounts  representing  less  than  twenty- 
five  dollars.  The  commissioners  are  expected  to  embody  all  such 
returns  in  their  annual  report. 

Discrimination. 

Among  the  early  laws  for  the  government  of  savings  banks,  it 
was  provided  that  no  persons  interested  in  making  the  loans  for 
such  institutions  should  themselves  become  borrowers  of  the  same. 
The  law  proved  to  be  a  wise  one.  In  the  course  of  time  it  came 
to  light  that  an  abuse,  resembling  somewhat  the  one  which  the 
above  law  was  intended  to  prevent,  had  become  somewhat  common. 
It  was  found  that  favoritism  was  too  often  shown  in  the  placing 
of  investments.  Personal  acquaintance,  direct  or  indirect,  had  more 
weight,  at  times,  than  the  actual  merits  of  the  security  offered 
would  warrant.  Thus,  to  a  certain  extent,  the  public  found  their 
privileges  with  these  institutions  unduly  and  improperly  abridged. 
It  must  not  be  understood  that  this  abuse  of  their  trust  by  bank 
officials  was  by  any  means  common  in  the  State.  It  was  not 
general,  but  frequent  and  disturbing  enough  to  call  for  legislative 
action,  which  was  had  in  1872.  The  act  of  that  year  provided 
that  the  taking  of  any  fee  by  an  officer  of  an  institution  for 
savings,  or  the  depriving  of  any  individual  of  his  rights  or  privi¬ 
leges,  by  any  preference  being  shown  in  the  matter  of  granting 
loans,  was  an  offense  punishable  by  a  fine  of  twice  the  amount 
illegally  taken. 

Annual  Returns. 

The  law  regarding  the  annual  returns  to  the  Government  on  the 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


23 


part  of  the  banks  has  been  changed  from  time  to  time.  The 
purpose  seems  to  have  been  to  keep  the  public  informed,  more 
and  more  definitely,  in  regard  to  the  growth  and  practical  working 
of  the  system,  not  less  than  to  provide  against  illegal  practices, 
and  the  unwarranted  abuse  of  privilege  and  authority.  From  1846 
to  i860  the  changes  in  the  law  were  infrequent.  The  general  statutes 
of  i860  contained  one  noticeable  amendment,  in  that  a  return  was 
required  of  the  average  annual  rate  of  dividend  since  the  last  extra 
dividend,  instead  of  for  the  previous  five  years,  as  formerly 
demanded.  This  was  again  changed,  in  1862,  to  the  demand  for 
a  statement  of  the  dates  on  which  extra  dividends  were  declared, 
and  of  the  average  annual  per  cent,  of  dividends  for  the  period 
ending  at  the  time  of  and  including  the  last  extra  dividend. 

In  1867,  the  following  items  were  called  for  in  addition  to  pre¬ 
vious  requirements  : 

1.  Number  and  amount  of  deposits  received. 

2.  Number  and  amount  of  deposits  received  exceeding  $300  at 
one  time. 

3.  Number  and  amount  of  withdrawals.  v 

4.  Number  of  accounts  opened. 

5.  Number  of  accounts  closed. 

6.  Surplus  on  hand. 

An  act  of  1874  added  the  following: 

1.  Rate  of  interest  on  loans. 

2.  Total  amounts  of  loans  at  different  rates  of  interest. 

In  1875,  another  act  called  for  the  number  and  amount  of  loans 
not  exceeding  $3,000  each. 

The  law  of  1876  provided  for  a  much  larger  number  of  items 
than  had  previously  been  required.  They  may  be  summarized  as 
follows  : 

1.  Returns  were  to  be  made  to  close  of  business  the  last  busi- 
day  of  October. 

2.  Number  of  corporators. 

3.  Amount  of  deposits,  and  each  item  of  other  liabilities. 

4.  Par  value,  and  estimated  market  value  of  public  funds,  bank 
stock  and  railroad  bonds,  held  as  investments. 

5.  Estimated  value  of  real  estate,  with  the  amount  invested  in 
same. 

6.  Amount  of  profits  earned. 

7.  Rate  and  amount  of  each  semi-annual  dividend,  instead  of  each 
ordinary  dividend. 

8.  The  time  for  declaring  dividends  to  be  fixed  by  the  by-laws 
of  each  institution. 

9.  Number  of  open  accounts.  (Instead  of  number  of  depositors, 
as  previously.) 

An  act  of  1879  added  the  following  items  to  the  required 
returns  : 


24 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


1.  Number  of  deposits  of  $1,000  and  upward. 

2.  Number  and  amount  of  deposits  of  $200  and  less. 

3.  Number  and  amount  of  deposits  of  $100  and  less. 

4.  Number  and  amount  of  deposits  of  $50  and  less. 

5.  Number  and  amounts  of  deposits  held  by  women,  guardians, 
in  trust,  and  by  charitable  associations 

In  1880,  the  act  of  1879  was  repealed,  and  the  following  sub¬ 
stituted  : 

1.  Number  and  amount  of  open  accounts  of  $50  and  less. 

2.  Number  and  amount  of  open  accounts  exceeding  $50  and  less 

than  $100. 

3.  Number  and  amount  of  open  accounts  exceeding  $100  and  less 
than  $200. 

4.  Number  and  amount  of  open  accounts  exceeding  $200  and  less 
than  $500. 

5.  Number  of  accounts  of  $1,000  and  more. 

6.  Number  of  accounts  to  the  credit  of  females,  guardians,  in 
trust,  and  of  religious  and  charitable  associations,  whenever  called 
for  by  the  commissioner. 

In  March,  1888,  this  portion  of  the  general  law  was  still  further 
amended,  and  all  previous  amendments  consolidated,  so  that  sec¬ 
tions  40  and  41  of  chapter  cxvi.  of  the  Public  Statutes  now  read  : 

Sec.  40.  “  The  treasurer  of  every  such  corporation  shall  annually, 
within  twenty  days  after  the  last  business  day  of  October,  make 
a  report  to  the  commissioners,  showing  accurately  the  condition 
thereof  at  the  close  of  business  on  said  day.  The  report  shall  be 
in  such  form  as  the  commissioners  shall  prescribe,  and  shall  specify 
the  following  particulars,  namely :  Name  of  corporation  and  number 
of  corporators;  place  where  located;  amount  of  deposits;  amount 
of  each  item  of  other  liabilities;  public  funds,  including  all  United 
States,  State,  county,  city,  and  town  bonds,  stating  each  particular 
kind,  the  par  value,  estimated  market  value,  and  amount  invested 
in  each;  loans  on  public  funds,  stating  amount  on  each;  bank 
stock,  stating  par  value,  estimated  market  value,  and  amount 
invested  in  each ;  loans  on  bank  stock,  stating  amount  on  each  ; 
railroad  bonds,  stating  par  value,  estimated  market  value,  and 
amount  invested  in  each  ;  loans  on  railroad  bonds,  stating  amount 
on  each ;  estimated  value  of  real  estate,  and  amount  invested  therein ; 
loans  on  mortgage  of  real  estate;  loans  to  counties,  cities,  or 
towns ;  loans  on  personal  security ;  cash  on  deposit  in  banks,  with 
the  names  of  such  banks,  and  the  amount  deposited  in  each ;  cash 
on  hand ;  the  whole  amount  of  interest  or  profits  received  or 
earned,  and  the  rate  and  amount  of  each  semi-annual  and  extra 
dividend  for  the  previous  year ;  the  times  for  the  dividends  fixed 
by  the  by-laws ;  the  rates  of  interest  received  on  loans ;  the  total 
amount  of  loans  bearing  each  specified  rate  of  interest ;  the 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS.  25 

number  of  outstanding  loans  which  are  of  an  amount  not 
exceeding  three  thousand  dollars  each,  and  the  aggregate  amount 
of  the  same  ;  the  number  of  open  accounts ;  also  the  number  and 
amount  of  deposits  received ;  the  number  and  amount  of  with¬ 
drawals  ;  the  number  of  accounts  opened,  and  the  number  of 
accounts  closed,  severally  for  the  previous  year ;  and  the  annual 
expenses  of  the  corporation ;  all  of  which  shall  be  certified  and 
sworn  to  by  the  treasurer.  The  president  and  five  or  more  of  the 
trustees  shall  certify  and  make  oath  that  the  report  is  correct 
according  to  their  best  knowledge  and  belief.”  Section  41.  “  Begin¬ 
ning  with  the  year  ending  with  the  last  business  day  of  October, 
1889,  and  annually  thereafter,  such  reports  shall  also  state  the 
number  and  amount  of  deposits  of  fifty  dollars  and  less,  of  those 
exceeding  fifty  dollars  and  not  more  than  one  hundred  dollars,  of 
those  exceeding  one  hundred  dollars  and  not  more  than  two  hun¬ 
dred  dollars,  of  those  exceeding  two  hundred  dollars  and  not  more 
than  five  hundred  dollars,  of  those  exceeding  five  hundred  dollars 
and  less  than  one  thousand  dollars,  of  those  of  one  thousand 
dollars  or  more ;  and  of  those  to  the  credit  of  women,  both  adult 
and  minor,  guardians,  religious  and  charitable  associations,  and  in 
trust,  respectively,  received  during  the  year.” 

Law  of  1876. 

The  general  law  of  1876,  approved  October  1st,  was,  in  the  main, 
a  codification  of  existing  laws  governing  institutions  for  savings. 
This  law,  with  such  amendments  as  were  made  previous  to  1882, 
was  incorporated  into  the  general  statutes  of  that  year.  In  this 
re-arrangement,  certain  important  changes  were  adopted,  a  brief 
summary  of  the  more  important  of  which  seems  called  for  in  this 
connection. 

1.  Trustees  to  meet  once  in  three  months,  to  prepare  a  state.' 
ment  from  the  books  of  the  exact  condition  of  the  bank,  such 
statement  to  take  the  form  of  a  trial  balance  of  its  accounts. 
This  statement  to  be  posted  in  a  conspicuous  place  in  the  bank 
until  the  next  meeting. 

2.  The  maximum  amount  of  deposits  to  be  loaned  on  first  mort¬ 
gages  in  the  State,  was  reduced  from  75  to  70  per  cent.;  such 
loans  not  to  exceed  60  per  cent,  of  a  fair  valuation.  All  loans  to 
be  made  on  the  recommendation  of  not  less  than  two  members 
of  the  board  of  investment,  who  shall  certify  thereto. 

3.  Deposits  in  national  banks,  on  call  and  at  interest,  not  to 
exceed  20  per  cent,  of  the  total  deposits.  (In  i860,  the  amount 
allowed  was  7  per  cent.,  and  in  1863,  12  per  cent.) 

4.  Loans  on  personal  security  not  to  exceed  one-third  (changed 
from  one-half)  of  deposits,  and  to  run  not  longer  than  one  year. 

5.  Before  declaring  a  semi-annual  dividend,  there  must  be  reserved, 


2  6 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


out  of  the  six  months’  earnings,  not  less  than  one-eighth  nor  more 
than  one-fourth  per  cent,  of  the  deposits,  as  a  guaranty  fund, 
until  the  same  shall  have  reached  five  per  cent,  of  the  deposits, 
at  which  amount  it  shall  be  maintained  to  meet  losses. 

6.  Ordinary  dividends  limited  to  five  per  cent. 

7.  No  dividend  to  be  declared  unless  the  net  profits  of  the 
previous  six  months,  over  and  above  such  sums  as  are  added  to 
the  guaranty  fund,  are  at  least  two  per  cent,  of  the  deposits, 
without  the  approval  in  writing  of  the  Savings  Bank  Commis¬ 
sioners.  (In  March,  1880,  the  amount  of  net  profits  required  was 
changed  to  \l/z  per  cent.) 

8.  Once  in  three  years,  when  the  net  profits  over  and  above  the 
guaranty  fund  and  the  regular  dividends  amount  to  one  per  cent, 
of  such  sums  as  have  remained  on  deposit  for  one  year  next  pre¬ 
ceding,  such  profits  shall  (changed  to  may  in  1888)  be  divided 
among  depositors  whose  funds  shall  have  remained  on  deposit  for 
one  year  at  least,  in  proportion  to  -the  amount  of  dividends 
declared  on  their  deposits  for  the  three  years  preceding. 

The  practical  results  of  the  law  regulating  the  accumulating  of 
a  reserve,  seem  to  have  been  effectual  in  preventing  the  widespread 
tendency  to  divide  the  entire  profits  semi-annually  among  the 
depositors.  The  tendency  to  compete  with  each  other,  among  the 
banks,  led,  too  often,  to  the  sacrificing  of  the  guaranty  fund  for 
the  sake  of  a  more  favorable  showing  in  dividends.  Thus  we  find 
that  in  1867,  the  average  surplus  held  by  the  savings  banks  was 
3.94  per  cent,  of  the  deposits.  In  1870,  the  average  was  1.83  per 
cent.;  in  1871,  1.77  per  cent.;  in  1872,  1.65  per  cent.;  and  in  1873, 
1.56  per  cent. — a  continuous  decline.  The  law  of  1876,  as  has  been 
seen,  calls  for  an  undivided  guaranty  fund  of  five  per  cent,  of  the 
deposits. 

The  Crisis  of  1873. 

The  panic  of  1873,  coming  unannounced,  as  do  all  such  crises, 
found  the  banks  poorly  prepared  to  weather  the  impending  storm. 
The  investments  in  real  estate  mortgages  were  not  only  large, 
but  it  was  soon  found  they  had  been  based  too  generally  on 
excessive  valuations  of  the  property  involved.  Hence,  when  the 
depression  came,  real  estate  values  fell  to  a  point  alarmingly  near, 
and  too  often  below,  the  amount  of  the  mortgages.  The  attempt 
to  force  the  sale  of  such  property  resulted  in  a  further  decline. 
Besides,  the  demands  by  depositors  became  continuous  and  unusually 
large.  Individual  necessity  compelled  many  to  resort  to  their  bank 
accumulations  to  meet  their  expenses.  Reduced  incomes,  incident 
to  hard  times,  was  the  aggravating  cause  of  this  necessity.  The 
savings  banks  were  expected  to  respond  promptly  to  such  demands. 
But  the  chief  difficulty  was  not  found  in  dealing  with  these  small  • 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


27 


depositors,  whose  withdrawals,  though  considerable  in  the  aggre¬ 
gate,  were  individually  limited.  The  situation  became  trying,  and 
at  length  alarming,  when  large  depositors,  those  who  had  used 
the  banks  as  a  convenient  means  of  investment,  began  to  with¬ 
draw  their  deposits  from  fear  lest  the  banks  might  succumb  to 
the  trying  ordeal  through  which  they  were  passing.  Not  only  was 
it  found  that  large  numbers  had  accounts  reaching  the  full  lawful 
limit,  but,  in  numerous  instances,  resort  had  been  had  to  ingenious 
devices,  whereby  a  person,  by  opening  several  accounts,  “  m  trust,” 
for  example,  for  as  many  imaginary  individuals,  had  credit  on  the 
books  for  several  times  the  amount  permitted  by  law.  When  the 
crisis  came  such  accounts  were  the  first  to  be  closed. 

Taking  into  the  account  all  these  contingencies  which  seemed  to 
operate  with  peculiar  force  just  at  this  juncture,  and  also  con¬ 
sidering  the  other  fact,  that  the  financial  and  commercial  depres¬ 
sion  was  of  unusual  duration,  it  is  not,  perhaps,  so  surprising,  that 
the  period  from  1873  to  1880  was  one  of  unexampled  severity  in 
the  history  of  the  Massachusetts  savings  banks.  Whether  regarded 
from  the  point  of  view  of  the  number  of  institutions  involved,  or 
of  the  aggregate  losses,  the  record  is  equally  without  a  parallel. 

Stay  Law  of  1878. 

The  “stay  law,”  so  called,  of  March  21st,  1878,  was  the  imme¬ 
diate  outcome  of  this  distressing  situation.  It  was  intended,  not, 
as  has  been  very  generally  supposed,  as  a  measure  to  shield  the 
banks,  but  as  the  best  available  method  to  protect  the  interests 
of  depositors.  This  view  of  the  matter — and  it  is  the  true  and 
only  reasonable  one — was  but  little  regarded  at  the  time,  and  much 
unjust  and  harsh  criticism  of  the  law  and  its  authors  was  indulged 
in  by  those  whose  immediate  interests  were  the  most  protected 
thereby. 

The  law  simply  provided  that  the  Bank  Commissioners  should 
be  empowered  to  limit  the  time  and  the  amount  of  the  payments 
to  depositors  whenever,  in  their  judgment,  the  welfare  of  the 
depositors  so  demanded.  The  right  of  appeal  to  the  court  was 
reserved  to  the  depositor  in  case  of  any  dissatisfaction  ;  the  decision 
of  that  tribunal  was  to  be  final.  The  May  following,  a  law,  sup¬ 
plemental  of  the  foregoing,  was  passed,  giving  debtors  of  a  bank 
the  right  to  set  off  a  deposit  against  a  claim,  where  both  were 
vested  in  the  same  individual,  provided  said  deposit  was  not  made 
over  from  another  person  subsequent  to  the  commencement  of  a 
suit.  This  amendment,  however,  being  pronounced  unconstitutional 
by  virtue  of  its  implied  favoritism  toward  certain  debtors,  the 
Attorney-General  advised  the  banks  not  to  act  under  it,  at  least 
for  a  time. 

The  first  bank  to  take  advantage  of  the  stay  law  was  the  Brighton 


28 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


Five  Cents,  which  made  application  for  the  same  on  the  very  day 
the  law  passed  the  Legislature.  In  this  case,  the  Bank  Commis¬ 
sioners  directed  that,  during  the  period  from  March  21st  to  Septem¬ 
ber  2 1  st,  1878,  not  more  than  10  per  cent,  of  the  total  amount  due 
should  be  paid  to  each  depositor;  10  per  cent,  additional  was  to  be 
paid  during  the  period  from  September  21st  to  March  21st,  1879. 
No  further  sums  were  to  be  paid  except  by  order  of  the  com¬ 
missioners. 

Between  the  passage  of  the  stay  law  in  March,  1878,  and  Novem¬ 
ber  1  st,  1879,  twenty-four  banks  availed  themselves  of  its  protec¬ 
tion,  all  but  six  of  which  resumed  at  the  expiration  of  the  prescribed 
limit  of  time,  where  the  order  had  not  been  previously  revoked. 
Of  these  six,  all  but  one  were  ultimately  restored  to  full  corporate 
functions,  the  Ashburnham  alone  going  into  voluntary  liquidation 

The  real  magnitude  of  the  crisis  can  be  justly  estimated  when 
it  is  known  that  out  of  the  180  savings  banks  in  operation  in 
October,  1875,  no  less  than  forty-six  were  forced  either  to  suspend 
payment  entirely,  or  to  seek  refuge  under  the  “  stay  law.”  Twenty- 
four  out  of  the  above  forty-six  were  stopped  by  injunction  of  the 
Supreme  Court,  and  twelve  of  these  were  obliged  ultimately  to 
close  their  affairs,  two  only  paying  in  full. 

Regarding  the  amount  of  liabilities  involved  in  this  disaster,  we 
quote  from  an  article  on  the  subject  by  Dudley  P.  Bailey.  He 
says  :  “  The  amount  involved  was  one-fifth  of  the  largest  sum  ever 
held  on  deposit  by  the  savings  banks.  The  liabilities  of  the  banks 
placed  under  injunction  amounted,  at  the  date  of  the  proceedings 
against  them,  excluding  duplications,  to  $24,439,218.  The  liabilities 
of  the  restricted  banks,  not  including  those  enjoined,  amounted,  at  the 
date  of  restriction,  as  nearly  as  can  be  ascertained,  to  $27,873,414, 
giving  a  total  of  $52,312,633,  out  of  a  maximum  of  deposits,  in  1877, 
of  $244,596,614.  When  it  is  remembered  that  this  large  sum  for  a  con¬ 
siderable  portion  of  two  years  paid  no  dividends,  and  that  in  many 
of  the  banks  there  will  be  a  considerable  loss  of  principal  as  well  as 
interest,  the  magnitude  of  the  disaster  to  the  material  and  moral 
interests  of  the  State  can  be  in  some  measure  appreciated.”  The 
same  authority  also  states  that,  while  the  net  losses  of  all  the 
savings  banks  of  the  State  for  the  fifty  years  preceding  1866  were 
only  two-thirds  of  1  per  cent,  of  the  average  deposit  for  the  period, 
the  losses  for  the  thirteen  years,  from  1867-79,  were  2.2  per  cent, 
of  the  average  deposit  for  the  latter  period.  “  While  the  average 
deposit  increased  only  about  fifteen  times,  the  losses  increased 
thirty-eight  and  one-half  times.”  Placing  the  average  liabilities 
of  the  banks  for  two  years  at  $20,000,000,  and  estimating  the 
losses  at  not  less  than  two  years’  dividends  at  4  per  cent.,  the 
total  loss  from  this  source  would  reach  $1,600,000.  From  whatever 
point,  then,  we  view  the  situation,  the  calamity  appears  sufficiently 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS 


29 


appalling.  Annexed  will  be  found  a  table  showing  the  details  of 
the  operation  of  the  stay  law  on  the  twenty-four  banks  to  which 
alone  the  law  has  ever  been  applied  : 


£ 

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Board  of  Commissioners. 

With  the  increase  of  the  number  of  savings  banks,  and  the 
consequent  demand  for  their  thorough  and  frequent  supervision,  the 


30  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

duties  of  the  commissioner,  appointed  in  1866,  were  fast  getting 
beyond  control.  Accordingly,  to  supplement  his  labors,  an  addi¬ 
tional  commissioner  was  appointed  in  1876,  the  two  to  be  known 
as  the  Board  of  Commissioners  of  Savings  Banks.  The  original 
members  of  this  board  were  J.  Gatchell  and  C.  Curry.  They  made 
their  first  report  to  the  Legislature,  January  3rd,  1877,  it  being 
the  eleventh  in  the  series  since  the  appointment  of  the  first  com¬ 
missioner. 

The  duties  of  the  Receiver,  during  and  for  some  time  subse¬ 
quent  to  the  year  1878,  when  so  many  banks  were  forced  into 
liquidation,  were  important  and  responsible.  It  was  desirable  that 
their  doings  should  be  properly  inspected  and  audited.  Accord¬ 
ingly,  in  May,  1878,  an  act  was  passed  placing  the  matter  in  the 
hands  of  the  commissioners.  It  was  provided  that  said  commis¬ 
sioners  should  examine  and  report  upon  the  returns  of  such 
receivers  when  so  required  by  the  court.  They  were  also  required 
to  examine,  once  each  year,  the  accounts  and  the  doings  of  the 
receivers,  and  to  embody  the  results  of  such  examination  in  their 
annual  report.  The  commissioners  were  to  have  free  access  to  all 
books,  and  were  required  to  report  all  violations  of  duty  to  the 
Supreme  Judicial  Court.  They  were  also  empowered  to  examine 
officers  of  banks,  if  desired,  in  the  prosecution  of  these  duties. 

The  commissioners  having  brought  to  the  attention  of  the  Legis¬ 
lature  the  fact  that  they  had  found  methods  of  bookkeeping 
employed  in  certain  savings  banks  radically  defective,  by  an  act 
passed  in  April,  1879,  the  authority  to  prescribe  such  methods  as 
were  considered  satisfactory  was  given  the  board.  This  authority 
covered,  also,  the  matter  of  auditing. 

In  March,  1880,  it  was  made  the  duty  of  the  commissioners  to 
hold  in  their  custody  a  copy  of  the  bonds  given  by  the  treasurers 
of  savings  banks,  and  to  request  new  bonds  whenever  they  seemed 
to  be  demanded. 

By  an  act  of  March  16,  1882,  all  books  and  papers  of  insolvent 
banks  are  to  be  deposited  with  the  Commissioners  of  Savings 
Banks,  by  the  receivers  of  such  institutions,  within  one  year  after 
the  final  settlement  of  their  affairs. 

In  February,  1888,  the  law  of  1876,  requiring  the  commissioners 
to  visit  and  examine  the  savings  banks  once  each  year,  and  oftener 
if  necessary,  was  amended,  so  as  to  provide  that  in  cases  where 
an  institution  is  connected  with  a  national  bank,  arrangements 
shall  be  made  whereby  said  commissioner  shall  make  his  visits  in 
connection  with  the  national  bank  examiner. 

Taxation. 

From  first  to  last,  the  matter  of  the  taxation  of  savings  banks 
has  attracted  not  a  little  attention  from  legislators  and  others.  As 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


31 


we  have  already  seen,  the  proper  course  to  be  pursued  in  this 
particular,  in  connection  with  the  deposits,  was  for  a  long  time  an 
unsettled  problem,  resulting,  finally,  in  a  direct  tax.  It  is  probably 
true  that  the  savings  banks  of  Massachusetts  have  gained  immeas¬ 
urably,  in  comparison  with  those  of  other  States,  by  favorable 
legislation  in  this  matter  of  taxation. 

In  March,  1879,  the  law  of  1876  was  amended,  exempting  from 
taxation  such  real  estate  as  was  held  by  the  banks  under  fore¬ 
closure,  by  virtue  of  the  provisions  of  the  law  of  1868,  and  for 
the  period  there  specified.  This  provision  afforded  great  relief  at 
a  time  when  the  banks  were  forced  to  carry  an  unprecedented 
amount  of  such  assets. 

An  act  of  May,  1881,  provided  for  the  exemption  from  the  State 
tax  such  deposits  as  were  invested  in  real  estate  mortgages,  or  in 
real  estate  used  for  banking  purposes.  This  was  a  modification  of 
the  acts  of  1862  and  1868,  and  was  one  of  the  early  steps  in  the 
direction  of  the  removal  of  taxes  twice  imposed. 

By  the  law  of  1868  the  tax  on  deposits  was  reduced  from  three- 
fourths  to  one-half  of  one  per  cent.  In  May,  1881,  it  was  again 
restored  to  three-fourths  per  cent.,  to  take  effect  after  January  1st, 
1882. 

The  law  of  1876  provided  that  real  estate,  held  under  foreclosure, 
could  remain  a  legal  asset  for  five  years  from  the  date  of  fore¬ 
closure,  at  the  expiration  of  which  time  the  property  must  be 
sold.  To  such  an  extent  had  the  savings  banks  been  forced  to 
assume  such  property,  during  the  period  of  depression  from  1873 
to  1880,  that  compliance  with  the  law  at  this  juncture  threatened 
serious  losses  to  these  institutions.  The  conditions  of  the  market 
did  not  warrant  the  indiscriminate  forcing  of  real  estate  sales. 
Accordingly,  the  original  law  was  set  aside  by  the  Legislature  from 
time  to  time,  for  certain  specified  periods,  to  meet  this  situation. 
It  was  extended  thus  in  1882,  1883,  1884,  and  1886,  by  several 
special  acts  of  the  general  court.  In  1886,  the  limit  was  established 
at  July  1st,  1888,  with  the  provision  that  further  time  be  allowed, 
at  the  request  of  the  trustees  of  any  institution,  by  the  Bank 
Commissioners. 

Receivers. 

In  March,  1881,  the  general  court  passed  an  act  providing  for 
the  final  disposition  of  such  funds  as  remained  in  the  hands  of 
receivers,  after  the  affairs  of  an  institution  for  savings  had  been 
formally  and  legally  closed.  It  was  as  follows :  “  Receivers  of 
insolvent  savings  banks  and  institutions  for  savings  having  unclaimed 
moneys  or  dividends  belonging  to  the  estate  of  any  such  corpora¬ 
tion  remaining  in  their  hands  for  one  year  after  the  final  settle¬ 
ment  ordered  by  the  court,  shall  deposit  the  amount  so  remaining 
uncalled  for  with  the  treasurer  of  the  Commonwealth,  with  a 


32  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

schedule  of  the  names  and  residences,  so  far  as  known,  of  the 
parties  entitled  thereto,  and  said  treasurer  shall  receive  and  hold 
the  same  in  trust  for  such  parties  and  their  representatives ;  and 
said  treasurer  shall  pay  over  the  same  to  the  parties  entitled 
thereto,  upon  proper  demand  made  therefor,  upon  being  furnished 
with  evidence  satisfactory  to  him  of  the  identity  of  the  claimant 
and  the  justice  of  the  claim.” 

In  June,  1883,  an  additional  provision  was  enacted,  requiring 
receivers  to  make  annual  returns  to  the  court  of  the  names, 
amounts  due,  and  the  residences,  when  known,  of  such  persons  as 
have  not  claimed  the  amount  due  them  from  any  insolvent  insti¬ 
tution.  The  court  has  to  require  notices  served  on  such  persons 
in  due  form.  After  one  year  from  the  date  of  such  notice,  the 
receivers  are  required  to  report  again,  after  which  all  remaining 
moneys  are  to  be  turned  over  to  the  treasurer  of  the  Common¬ 
wealth  as  before  provided.  All  books  and  papers  are  to  be 
deposited  in  like  manner. 

There  is  no  part  of  the  law  governing  savings  banks  that  has 
been  subjected  to  more  numerous  changes  and  amendments,  from 
first  to  last,  than  that  relating  to  the  matter  of  investments.  With 
the  growth  in  number  and  in  available  resources,  the  banks  have 
been  brought  face  to  face  with  the  practical  difficulty  of  loaning 
their  funds  within  the  limits  prescribed  by  law.  In  the  exercise 
of  their  duties  of  supervision  over  the  affairs  of  these  institutions, 
the  Bank  Commissioners  have  been  led,  from  time  to  time,  to 
suggest  and  recommend  such  increased  facilities  for  making  loans 
as,  in  their  judgment,  seemed  within  the  bounds  of  safety.  Very 
many  of  these  suggestions  have  been  incorporated  into  the  laws 
regulating  investments. 

The  law  of  1876  limited  investments  in  county  and  town  notes, 
to  such  as  were  issued  by  counties  and  towns  in  Massachusetts, 
under  prescribed  conditions.  In  1880,  this  privilege  was  extended 
to  include  the  States  of  Maine,  New  Hampshire,  Vermont,  Rhode 
Island  and  Connecticut  where  the  indebtedness  did  not  exceed 
3  per  cent,  (changed  to  5  per  cent,  in  1881)  of  the  valuation. 

In  April,  1881,  provision  was  made  for  widening  the  scope  of 
previous  enactments,  by  adding  investments  in  first  mortgage  bonds 
of  railroad  companies  incorporated  under  the  laws  of  any  of  the 
New  England  States,  and  located  wholly  or  in  part  therein,  and 
which  have  earned  and  paid  regular  dividends  for  two  years  next 
preceding.  Also,  the  same  privilege  was  granted  in  respect  to  the 
bonds  of  roads  which  were  guaranteed  by  the  above  companies. 
Also,  investments  were  allowed  in  the  bonds  or  notes  of  any 
Massachusetts  railroad  unincumbered  by  mortgage,  and  having  paid 
a  dividend  of  not  less  than  5  per  cent,  for  two  years  ;  and  in  the 
notes  of  individuals  secured  by  such  railroad  bonds  or  notes.  In 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


33 


1887,  the  above  was  again  amended  so  as  to  include  the  notes  of 
citizens  of  this  Commonwealth,  with  collateral  consisting  of  the 
capital  stock  of  any  railroad  of  the  New  England  States,  whose 
road  is  wholly  or  in  part  in  the  same,  and  which  has  paid  a 
dividend  of  not  less  than  5  per  cent,  on  all  stock  for  the  five 
years  preceding.  Loans  on  such  stock  are  not  to  exceed  75  per 
cent,  of  the  market  value,  and  the  notes  are  not  to  run  more 
than  one  year  without  renewal. 

In  May,  1882,  investments  in  any  form  in  the  capital  stock  of 
any  national  bank  were  limited  to  3  per  cent,  of  the  deposits.  By 
another  act  of  the  same  month,  investments  were  permitted  in  the 
bonds  of  the  States  of  Pennsylvania,  Ohio,  Michigan,  Indiana, 
Illinois,  Wisconsin,  Iowa,  and  the  District  of  Columbia,  or  in  the 
bonds  issued,  for  municipal  purposes,  of  any  city  of  the  above 
States  and  of  New  York  State,  having  more  than  50,000  (changed 
to  30,000  in  April,  1885,)  inhabitants,  and  whose  net  indebtedness 
does  not  exceed  5  per  cent,  of  the  valuation  of  taxable  property ; 
and  in  the  notes  of  the  citizens  of  this  Commonwealth  with  the 
above  securities  as  collateral,  such  loans  not  to  exceed  80  per  cent, 
of  the  value  of  the  collateral  security.  This  law  was  repealed  in 
March,  1887,  and  another  substituted  which  was  in  no  essential 
different  from  the  foregoing,  except  that  it  specified  what  census 
should  be  used  in  determining  the  population  of  cities,  and  also 
changed  the  amount  to  be  loaned  on  such  collateral  from  “  80 
per  cent,  of  the  value”  to  “an  amount  not  exceeding  the  par 
value.” 

It  has  happened  from  time  to  time  within  the  past  decade,  that 
many  of  our  best  roads,  having  acquired  by  purchase,  lease,  or 
otherwise,  the  possession  of  certain  lines  or  branches,  the  property 
of  which  being  subject  to  some  form  of  incumbrance,  has  had  the 
effect  to  invalidate  the  obligations  of  the  parent  road  as  a  legal 
investment  for  savings  banks.  To  remedy  this  practical  difficulty, 
where  the  credit  of  the  main  road  was  in  no  way  impaired  by 
such  acquisition,  special  acts  of  the  Legislature  have  been  had  to 
cover  the  individual  cases  as  they  have  appeared.  Such  special 
legislation  will  be  briefly  referred  to. 

1.  Act  of  April,  1883.  Investments  allowed  in  bonds  or  notes  of 
Old  Colony  Railroad,  notwithstanding  the  mortgage  on  that  part 
of  the  road  formerly  belonging  to  the  Boston,  Clinton  &  Fitch¬ 
burg  Railroad. 

2.  Act  of  June,  1885.  Investments  allowed  in  bonds  and  notes 
of  the  Fitchburg  Railroad,  notwithstanding  the  mortgage  on  the 
Boston,  Barre  &  Gardner  Railroad. 

3.  Act  of  March,  1886.  Investments  allowed  in  the  bonds  of  the 
Worcester,  Nashua  &  Rochester  Railroad,  notwithstanding  the  lease 
to  the  Boston  &  Maine  Railroad. 


34 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


4.  Act  of  March,  1887.  Investments  permitted  in  bonds  or  notes 
of  the  Fitchburg  Railroad  issued  according  to  law. 

5.  Act  of  February,  1888.  Investments  allowed  in  the  bonds 
or  notes  of  the  Boston  &  Lowell  Railroad  Company,  notwith¬ 
standing  the  mortgages  on  those  portions  belonging  to  the  Salem 
&  Lowell,  and  the  Lowell  &  Lawrence  Railroad  companies. 

6.  Act  of  April,  1888.  Investments  permitted  in  the  bonds  and 
notes  of  the  Boston  &  Maine  Railroad  Company,  notwithstanding 
the  mortgages  on  those  portions  belonging  to  the  Eastern  Rail¬ 
road  in  Massachusetts  and  New  Hampshire,  and  to  the  Portsmouth, 
Great  Falls  &  Conway  Railroad. 

7.  Act  of  May,  1888.  Investments  allowed  in  first  mortgage  bonds 
of  New  York  &  New  England  Railroad  issued  on  their  terminal 
facilities  in  Boston,  said  mortgage  not  exceeding  60  per  cent,  of 
the  value  of  the  property  mortgaged. 

Among  the  general  acts  of  legislation  affecting  savings  bank 
investments,  subsequent  to  the  year  1882,  may  be  mentioned  the 
following  : 

In  April,  1884,  clause  6  of  section  20,  chapter  116,  of  the  Pub¬ 
lic  Statutes,  was  amended,  limiting  investments  by  savings  banks 
and  institutions  for  savings  in  bonds  and  other  personal  securities. 
The  amendment  provides  “  that  the  total  liabilities  to  any  such 
(bank)  corporation,  of  any  person,  or  of  any  partnership,  company 
or  corporation,  for  money  borrowed  upon  personal  security,  includ¬ 
ing  in  the  liabilities  of  a  partnership  or  company  not  incorporated 
the  liabilities  of  the  several  members  thereof,  shall  at  no  time 
exceed  5  per  cent,  of  the  deposits  and  income." 

In  February,  1879,  a  law  was  enacted  permitting  loans  upon  the 
notes  of  depositors  to  the  amount  of  one-half  the  deposit  in  each 
case,  the  book  and  deposit  to  be  held  as  collateral. 

In  1885,  it  was  provided  that  investments  could  be  made  in  the 
bonds  and  notes  of  such  incorporated  districts  in  Massachusetts 
as  have  a  net  indebtedness  not  exceeding  5  per  cent,  of  the  last 
valuation  of  its  property. 

In  March,  1886,  the  amount  permitted  to  be  deposited  in  national 
banks  and  trust  companies  was  limited  to  the  maximum  of  5  per 
cent,  of  the  deposits,  and  in  no  case  to  exceed  25  per  cent,  of 
the  capital  stock  and  surplus  of  said  deposit  banks. 

General  Legislation. 

In  May,  1885,  a  quite  important  act  was  passed,  providing  for 
the  payment  of  deposits  of  deceased  persons  upon  orders  or  drafts 
given  previous  to  .such  decease,  provided  demand  for  payment  is 
made  within  thirty  days  thereafter,  or  before  notice  of  such  decease 
has  been  received  by  the  bank. 

In  March,  1886,  a  law  was  passed  relating  to  the  bonds  required 
of  savings  bank  treasurers.  It  had  reference  to  continuing  them 


I 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS.  35 

in  force,  by  requiring  a  renewal  of  the  same  as  often,  at  teast,  as 
once  in  five  years. 

By  a  special  act  of  February,  1886,  the  Suffolk  Bank  of  Boston 
was  allowed  to  exceed  the  prescribed  limit  in  its  holding  of  real 
estate,  the  amount  being  fixed  at  $250,000  in  addition  to  that 
previously  authorized. 

In  February,  1888,  an  act  was  passed  demanding  that  during  the 
year  1889,  and  every  third  year  thereafter,  savings  banks  shall  call 
in  the  books  of  depositors  for  verification,  in  such  manner  as  the 
trustees  may  direct.  One  of  the  chief  obstacles  to  a  complete  and 
satisfactory  examination  and  verification  of  the  accounts  of  a  sav¬ 
ings  bank  lies  in  the  fact  that  a  large  percentage  of  the  depositors 
seldom  present  their  books  for  comparison  with  the  bank  accounts, 
having  no  intelligent  idea  of  the  need  or  desirability  of  so  doing. 
This  law  was  proposed  and  enacted  for  the  purpose  of  meeting 
in  some  measure  this  situation.  Many  of  the  institutions  employ, 
temporarily,  a  special  accountant  to  attend  to  such  examination.  In 
this  way  the  regular  officials  of  the  bank  are  exempt  from  possible 
criticism  regarding  the  exactness  with  which  the  law  is  complied  with. 

In  March,  1888,  an  amendment  to  the  law  of  1876,  regarding 
the  duties  of  trustees,  was  enacted.  It  covered  a  point  which  had 
for  some  time  been  looked  upon  with  apprehension  by  the  com¬ 
missioners,  namely,  the  want  of  regularity  with  which,  in  some 
cases,  these  advisory  officers  attended  to  their  duties.  It  was 
accordingly  provided  that,  “  if  a  trustee  fails  to  attend  the  regular 
meetings  of  the  board,  or  to  perform  any  of  the  duties  devolved 
upon  him  as  such  trustee,  for  six  consecutive  months,  his  office 
shall  thereupon  become  vacant.” 

In  March,  1888,  the  forty  and  forty-first  sections  of  chapter  one 
hundred  and  sixteen  of  the  public  statutes,  previously  quoted  in 
this  history,  was  slightly  amended.  The  time  for  making  the  annual 
report  was  changed  from  fifteen  to  twenty  days  following  the  last 
business  day  of  October ;  the  returns  are  to  contain  a  statement 
of  the  amount  of  each  extra  as  well  as  of  each  semi-annual  divi¬ 
dend  ;  the  report  is  to  be  signed  by  the  president,  as  well  as  by 
“  five  or  more  trustees,”  and  the  date  on  which  the  law  requiring 
a  statement  of  the  number  of  deposits  of  each  specified  amount  is 
to  take  effect,  was  fixed  at  “the  year  ending  with  the  last  business 
day  of  October,  1889.” 

Conclusion. 

After  all,  the  true  test  of  the  value  or  practical  utility  of  any 
system  is  the  discriminating  analysis  of  time.  If  there  exist  elements 
of  weakness,  nothing  can  prevent  their  exposure  ;  and,  on  the  other 
hand,  any  resources  of  strength  and  stability  will  inevitably  find  a 
deserved  recognition.  Time  may,  indeed,  be  a  stern  arbiter,  and  yet 
she  is  usually  a  just  one. 


36  HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 

Thesb  reflections  force  themselves  into  prominence  when  viewing 
in  the  retrospect  the  savings  bank  system  of  this  country,  and  espe¬ 
cially  of  Massachusetts.  Starting  in  this  State,  as  we  have  seen, 
while  the  idea,  in  a  practical  sense,  was  yet  new  to  the  world,  it  has 
enjoyed  a  career  of  continuous  prosperity  and  advancement.  Strange 
to  say,  it  has  met  with  but  few  reverses,  and  these  have  been 
brief  and  generally  restricted  in  their  influence  ;  so  that  the  system 
remains,  after  more  than  seventy  years  of  practical  operation,  as 
strong  and  helpful  in  its  maturity  as  could  have  been  hoped  for  by 
its  warmest  advocates  and  supporters  during  its  incipiency. 

We  have  by  no  means,  however,  reason  to  flatter  ourselves  that 
the  system  has  arrived  at  a  condition  of  perfection,  for  there  may 
yet  be  found  many  suggestions  for  its  improvement.  And  yet  it 
may  be  confidently  accepted  as  true,  that  in  no  other  State  of  the 
Union,  nor  in  any  country  of  the  old  world,  has  there  been  a  more 
marked  advance,  or  more  permanent  and  satisfactory  results  attained, 
in  the  practical  endeavor  to  provide  for  and  to  stimulate  habits  of 
prudence  and  thrift  among  the  common  people  than  in  the  State  of 
Massachusetts.  The  wisdom  of  her  foremost  lawmakers,  not  less 
than  the  sound  practical  sense  and  business  insight  of  her  best 
citizens,  have  been  invited  to  the  task.  The  results  have  been  com¬ 
mensurate  with  the  effort  put  forth  ;  and  it  is  therefore  with  a  just 
pride  that  we  behold  the  fruition  of  their  endeavors. 

Since  the  early  days  of  the  savings  bank  system  in  Massachusetts, 
as  we  have  seen,  most,  if  not  all,  legislation  in  its  behalf  has  been 
in  three  distinct,  and  yet,  really  analogous  directions.  First  and 
primarily,  the  endeavor  has  been  to  make  the  system  so  simple  and 
practical  that  every  possible  means  of  helpfulness  to  the  common 
people,  for  whose  benefit  these  banks  are  intended,  may  be  afforded. 
To  this  end  the  necessary  business  details  attending  the  opening  of 
accounts,  the  deposit  and  withdrawal  of  money,  the  privileges  of 
minors  arid  of  dependent  persons  and  the  like,  have  been  reduced  to 
the  simplest  and  most  apparent  methods.  Also,  in  the  matter  of 
expense  attending  the  management  of  the  affairs  of  these  institu¬ 
tions,  as,  also,  in  the  regulation  of  taxation,  a  just  and  proper  spirit 
of  discrimination  favorable  to  their  pecuniary  interests  has  always 
prevailed. 

Secondly,  in  the  regulation  of  the  very  vital  interests  of  these 
institutions  as  connected  with  the  investments  prescribed  and 
allowed,  the  policy  has  always  been  to  give  the  largest  freedom 
practicable,  within  the  limits  of  safety.  From  year  to  year  these 
limits  have  been  wisely  extended,  so  that  they  have  come  to  include 
many  of  the  more  substantial  classes  of  securities  out  of  the  State, 
and,  in  some  instances,  outside  of  New  England.  Originally,  the 
investments  were  required  to  be  made  almost  entirely  within  the 
limits  of  Massachusetts,  but  the  widespread  development  of  State 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


37 


and  municipal  credit  elsewhere,  served  to  dictate  a  more  liberal 
policy.  A  strict  conservatism,  however,  has  always  obtained  in  all 
legislation  affecting  this  important  interest.  There  is  one  class  of 
securities  which  has  never  met  with  special  favor  among  legislators 
in  this  State,  namely,  Western  mortgages.  Other  States  have 
admitted  them  to  their  legalized  catalogue  of  investments.  It 
remains  to  be  seen  whether  these  securities  will  prove  safe  and 
reliable  during  a  series  of  years. 

The  third  point  which  has  engaged  the  attention  of  our  law¬ 
makers  quite  constantly,  and  which  has  had  the  effect  to  create  a 
widespread  confidence  in  our  savings  bank  system,  is  the  strict 
supervision  of  the  affairs  of  the  individual  institutions  demanded, 
and  the  constant  publicity  given  to  the  same.  The  sworn  returns, 
required  annually  of  the  officers,  have  been  enlarged  and  elaborated 
in  their  details,  until  they  now  cover  every  department  and  feature 
of  the  system,  the  special  knowledge  of  which  can  be  of  any 
possible  value  in  revealing  the  internal  condition  of  the  banks. 

Thus  it  has  been  seen  that,  during  the  past  fifty  years,  little 
has  been  omitted,  so  far  as  our  present  wisdom  and  experience  can 
dictate,  the  accomplishment  of  which  would,  in  any  great  degree, 
have  given  greater  strength  or  increased  popular  favor  to  a  class 
of  institutions  in  the  State  upon  the  existence  of  which  has 
depended,  in  no  small  degree,  the  moral  as  well  as  the  material 
prosperity  of  the  common  people. 

Annexed  will  be  found  tables  showing  the  growth  of  the  savings 
bank  system  from  its  inception  in  1 8 1 6  to  1887,  the  year  of  the 
latest  available  returns,  which  indicate,  more  succinctly  and  clearly 
than  could  be  done  in  any  other  form,  the  various  changes  that 
have  taken  place,  and  the  surprising  advance  that  has  been  made  in 
the  several  departments  of  the  system. 


Jable  Showing  the  Progress  of  the  Massachusetts  Savings 

Banks  from  1816  to  1887. 


Years. 

No.  of 
Charters 
Granted. 

1 

No.  in 
Existence  at 
Close  of 
Each  Year. 

Years. 

No.  of 
Charters 
Granted. 

No.  in 
Existence  at 
Close  of 
Each  Year. 

1816 . 

1 

X 

1827 . 

2 

8 

r8iy  . 

O 

1 

1828 . 

=5 

x3 

1818  . 

1 

2 

1829 . 

2 

i=5 

tStq  . 

0  * 

2 

1820 . 

O 

1=5 

T820  . 

1 

2 

1821 . 

4 

IQ 

T82T— /J . 

0 

'X 

l832 . 

I 

20 

182=5. .' . 

2 

5 

1833 . 

2 

22 

1826  . 

1 

6 

38 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


Table  Showing  the  Progress  of  the  Massachusetts  Savings 
Banks  from  1816  to  1887 — continued. 


Years. 

No.  of 
Charters 
Granted. 

I 

No.  of  Banks  ' 
in  Operation.  \ 

Amount 

of 

Deposits. 

1 

Annual 

Increase 

Per  Cent. 

No.  of 

Depositors. 

Average  to 

Each  Account. 

l 

Dividends 

Reported. 

Average 

Rate  of 

Dividend. 

1834.... 

8 

22 

$3,407,773 

_ 

24,256 

$140.09 

$138,576 

_ 

1835 .... 

3 

27 

3,92I,37° 

15 

27,232 

143-99 

135,853 

— 

1836 .... 

1 

28 

4,374,578 

11^ 

29, 786 

146.19 

166,422 

— 

i837--.. 

2 

30 

4,781,426 

9/6 

32,564  * 

146.51 

295,225 

— 

1838.... 

0 

30 

4,869,393 

2 

33,063 

147-27 

248,039 

— 

1839.... 

0 

30 

5,608,159 

36,686 

152.86 

216,957 

— 

1840. . . . 

0 

3i 

5,8i9,554 

3% 

37,470 

I57-98 

262,001 

— 

1841 .... 

0 

30 

6,714,182 

15K 

4U423 

162.08 

246,868 

— 

1842 .... 

1 

30 

6,900,451 

2^ 

42,587 

162.03 

282,231 

— 

1843.-.. 

0 

3i 

6,935,547 

K 

43,217 

160.40 

319,339 

— 

1844... 

0 

3* 

8,261,345 

19 

49,699 

160.23 

3n,42i 

— 

1845.... 

4 

33 

9,813,288 

18% 

58,178 

168.66 

407,403 

— 

1846. . . . 

5 

38 

10,680,933 

85-6 

62,893 

169.82 

345,443 

$4  67 

1847.... 

2 

39 

11,780,813 

10 

68,312 

172.45 

742,462 

6  50 

1848. . . . 

4 

4i 

11,970,448 

1 Y\ 

69,894 

171.26 

46i,774 

— 

1849.... 

1 

43 

12,111,554 

71,629 

169.08 

384,843 

4  50 

1850  . . . 

2 

45 

13,660,024 

13 

78,823 

I74-57 

470,646 

4  64 

1851 .... 

8 

45 

I5, 554, 089 

14 

86,537 

179-73 

543,470 

4  78 

1852. . . . 

2 

53 

18,401,308 

12 

97,353 

189.01 

033, 236 

4  69 

1853-.. • 

6 

60 

23,370,ro2 

27’ 

117,404 

T99-°5 

845,688 

4  78 

1854.... 

16 

73 

25,936,858 

11 

136,654 

189.88 

999,877 

4  °4 

1855.... 

10 

80 

27,296,217 

4% 

148,263 

184.10 

1,049,435 

4  97 

1836. . . . 

0 

81 

30,373,447 

1094: 

165,484 

184.15 

1,123,038 

4  19 

1857.... 

1 

86 

33,015,757 

8% 

177,375 

186.13 

J, 242, 383 

5  °5 

1858.... 

0 

86 

33,9I4,972 

2% 

182,655 

185.67 

1,363,993 

5  °6 

1859.... 

1 

86 

39,424,419 

16 

205,409 

I9I-93 

1,450,024 

5  01 

i860. . . . 

4 

89 

45,054,236 

14  M 

230,068 

195.83 

1,663,407 

5  °5 

1861 .... 

5 

93 

44,785,439 

*3-5 

225,058 

j98.99 

U943,532 

4  50 

1862. . . . 

0 

93 

50,403,674 

12  y2 

248,900 

202 . 50 

1,977,463 

4  *3 

1863.... 

2 

95 

56,883,828 

*2  4-5 

272,219 

208 . 92 

2,087,115 

4  90 

1864. . . . 

5 

97 

62,557,604 

10 

291,616 

214.52 

2,258,495 

4  !4 

1865 .... 

3 

102 

59,936,482 

*4  I_5 

291,488 

205 . 62 

2,738,531 

4  75 

1866. . . . 

1 

102 

67,732,264 

13 

3i6,853 

213.76 

2,908,235 

5  26 

1867. . . . 

6 

108 

80,43^583 

l8% 

348,593 

230.73 

3,514,715 

5  42 

1868.... 

8 

“5 

94.838,336 

18 

383,094 

247.55 

4,481,264 

5  80 

1869. . . . 

20 

130 

112,119,016 

18  1-5 

34U769 

259.67 

5,444,719 

6  00 

1870. . . . 

10 

I39 

*35,  745,097 

21 

488,797 

277.71 

6,725,428 

6  11 

1871 .... 

18 

160 

163,704,077 

20% 

561,201 

291.52 

8,103,004 

6  09 

1872. . . . 

*3 

172 

i84,797,3i3 

12^ 

630,246 

293.21 

9,622,775 

6  07 

1873.... 

2 

i75 

202,195,343 

sy2 

666,229 

303.49 

10,807,906 

6  15 

1874.... 

4 

179 

217,452,120 

IYt. 

702,099 

309-71 

11,782,914 

6  17 

1875.... 

2 

180  - 

237,848,963 

9  2-5 

720,639 

330.05 

12,816,579 

6  15 

1876. . . . 

0 

180 

243,340,642 

2^ 

739,289 

329-I5 

12,403,074 

5  67 

1877.... 

0 

179 

244,596,614 

739,757 

330.64 

11,193,795 

5  00 

1878. . . . 

0 

168 

209,860,631 

*141-5 

674,251 

311.25 

8,174,568 

4  00 

1879.... 

0 

166 

206,378,709 

*1% 

675,555 

305-50 

7,272,822 

3  68 

1880. . . . 

1 

164 

218,047,922 

5xA 

706,395 

308.68 

7,957,887 

3  93 

1881.... 

0 

165 

230,444,479 

5% 

738,951 

311.85 

8,293,774 

4  00 

1882. . . . 

1 

167 

241, 311, 362 

4  7-io 

772,518 

312.37 

8,530,385 

3  97 

1883.... 

1 

168 

252,607,593 

4.68 

806,010 

3I3  4° 

9,535,39! 

4  09 

1884 .... 

1 

168 

262,720,146 

4 

826,008 

318.06 

9,877,713 

4  15 

1885. . . . 

5 

171 

274,998,412 

4% 

848,787 

323-99 

10,284,661 

4  M 

1886.... 

0 

172 

^A91D^ 

5-89 

906,039 

321.40 

1  10,504,861 

4  06 

1887.... 

0 

i73 

302,948,624 

4.04 

944,778 

320.66 

n,i55,440 

4  06 

*  Decrease. 


HISTORY  OF  THE  MASSACHUSETTS  SAVINGS  BANKS. 


39 


Table  Showing  Investments  of  Massachusetts  Savings  Banks 
at  Different  Periods  from  1834  to  1887,  three  right- 
•  hand  figures  being  omitted  in  every  case. 


1834. 

1838. 

1847. 

1852. 

1857- 

1863. 

Public  funds .  . 

2 

70 

2,130 

1,176 

855 

18,343 

Loans  on  public  funds .  . 

— 

10 

14 

7 

20 

59i 

Bank  stock . 

M92 

1,426 

1,978 

3,555 

6,189 

9,887 

Loans  on  bank  stock . 

557 

563 

M3 

550 

1,049 

37i 

Railroad  bonds . .  . 

— 

— 

— 

— 

— 

— 

Loans  on  railroad  bonds . . 

— 

— 

— 

— 

— 

— 

Loans  on  railroad  stock . 

— 

— 

3°° 

261 

106 

80 

Railroad  notes . 

— 

— 

— 

— 

— 

— 

Real  estate  (for  banking-  purposes) . 

— 

— 

92 

102 

170 

348 

Real  estate  (by  foreclosure) . 

— 

— 

— 

— 

— 

— 

Loans  on  real  estate . 

387 

1,121 

4U32 

5,615 

11,099 

16,685 

Loans  on  personal  security . 

283 

672 

2,053 

5,023 

8,885 

4,5i4 

Loans  to  counties,  cities,  and  towns  (notes) 

269 

465 

947 

2,012 

3,370 

4,970 

Deposits  in  banks  on  interest . 

520 

568 

140 

288 

1,288 

742 

Deposits  in  banks  not  on  interest . 

— 

— 

— 

— 

— 

— 

Loans  to  Massachusetts. . . . . 

— 

— 

— 

— 

— 

— 

Loans  on  depositors’ books . 

— 

— 

— 

— 

— 

— 

Sundry  assets* . 

— 

— 

44 

i45 

214 

— 

Cash  on  hand . 

24 

144 

210 

388 

296 

936 

1867. 

1872. 

1877. 

1882. 

1887. 

Public  funds . 

29,960 

21,998 

33,229 

36,152 

40,304 

Loans  on  public  funds . 

1,218 

1,680 

L259 

716 

903 

Bank  stock . 

10,921 

16,972 

26,154 

25,300 

26,850 

Loans  on  bank  stock . 

441 

L52i 

1,224 

j,ii7 

i,43i 

Railroad  bonds.. . 

733 

4,602 

9,076 

9,016 

21,185 

Loans  on  railroad  bonds . 

— 

!33 

— 

171 

Loans  on  railroad  stock . 

278 

545 

— 

232 

Railroad  notes . 

— 

— 

— 

3,080 

Real  estate  (for  banking  purposes) . 

576 

1,968 

2,840 

2,540 

2,390 

Real  estate  (by  foreclosure) . 

— 

— 

5,091 

7,201 

2,512 

Loans  on  real  estate . 

21,259 

89,684 

116,241 

86,129 

119,792 

Loans  on  personal  security . 

9,636 

33,329 

34,124 

56,928 

78,518 

Loans  to  counties,  cities,  and  towns  (notes) 
Deposits  in  banks  on  interest . 

6,577 

12,464 

10,170 

9,293 

8,791 

1,524 

1,729 

6,950 

12,907 

7,7i7 

Deposits  in  banks  not  on  interest . 

— 

— 

— 

— 

528 

Loans  to  Massachusetts . 

— 

— 

— 

— 

950 

Loans  on  depositors’  books . 

— 

— 

— 

— 

215 

Sundry  assets* . 

— 

— 

2U35 

2,280 

909 

Cash  on  hand . 

1,141 

i,657 

L52i 

1,060 

61 X 

*  This  item  includes  railroad  stock,  accrued  interest,  premium  and  expense  accounts,  and 
such  other  assets  as  are  not  classified. 


A  Necessary  Work  for  Every  Banker  and  Lawyer. 


AND  BANK  COLLECTIONS 


By  ALBERT  S.  BOLLES, 

PROFESSOR  OF 

0 

Mercantile  Lav  and  Practice  in  tie  Wharton  School  of  Finance  and  Economy, 

UNIVERSITY  OF  PENNSYLVANIA, 

AND  EDITOR  OF  THE 

~R  A  TSTR—FIT?,^  !MI  A-ZTISTIE. 

- «-<♦►-> - 

This  important  work  is  divided  into  three  parts  :  The  Receiving  and  Keeping  of 
Deposits ;  the  Paying  of  Them  ;  and  Collections. 

In  the  First  Part  the  following  subjects  are  considered  : 

Kinds  of  Deposits  and  Liability  for  their  Loss— Nature  of  Items  of  Deposits,  When  Checks  are 
considered  Cash — Authority  of  Banks  to  Receive  Deposits— Deposits  after  Banking  Hours— 
To  what  Officer  Deposits  should  be  Paid— Nature  of  a  Depositor’s  Contract,  When  is  a  Bank 
Debtor,  and  When  Agent  of  a  Depositor— Pass-books. 

The  Second  Part  covers  the  following  subjects : 

Nature  of  a  Check— Order  of  Payments— Payment  of  Deposits— Corporation  Deposits— Payments 
to  Executors  and  Trustees —Attaching  Creditors  of  Depositor— Principal  and  Agent— Partner¬ 
ship  Deposits— Paymentof  Joint  Deposits— Payment  of  Wife’s  Deposits— Payments  to  Donees— 
Payments  by  Special  Agreement— Saving  Bank  Deposits— Payment  of  Forged  Checks— Pay¬ 
ment  on  Legal  and  Forged  Indorsements— Payment  of  Certified  Checks— Payment  of  Certi¬ 
ficates  of  Deposit— Payments  impending  and  after  Insolvency— Presentation  of  Checks  for 
payment— In  what  Money  shall  Deposits  be  Paid— When  can  a  Depositor  Sue  a  Bank— When 
can  the  Holder  of  a  Check  Sue  the  Drawer  and  Indorser— When  can  the  Check  Holder  Sue 
the  Drawee— When  a  Bank  can  recover  Money  Paid  by  Mistake— The  Statute  of  Limita¬ 
tions— Overdrafts— When  can  a  Deposit  be  Retained  to  Pay  the  Depositor’s  Indebtedness- 
Payment  of  the  Depositor’s  Notes— Payment  through  the  Clearing  House— Public  Deposits. 

In  the  Third  Part,  relating  to  collections,  the  following  subjects  are  fully 
treated: 

Collection  of  Notes  and  Checks— Liability  of  the  Collecting  Bank  and  Sub-Collecting  Bank  to  the 
Owner— Proceeds  of  Collections-  Damages. 

The  comprehensive  nature  of  the  work  must  be  apparent  from  this  description 
The  law  in  sixteen  hundred  cases  is  carefully  stated.  The  work  contains  554  pages 
Price,  in  cloth,  $4.50;  full  law  sheep,  $5.00. 


Published  by  HOMANS  PUBLISHING-  COMPANY. 


A  BOOK  FOR  ALL  NATIONAL  BANKS 


AND  THEIR  ATTORNEYS. 


—  THE  — 

NATIONAL  BANK  ACT 

AND  ITS 

JUDICIAL  MEANING, 

WITH  AN  APPENDIX 

CONTAINING  OFFICIAL  INSTRUCTIONS  AND  RULES  RELATING  TO  THE  FORMATION  AND 
MANAGEMENT  OF  NATIONAL  BANKS,  UNITED  STATES  BONDS,  AND  THE 
ISSUE  AND  REDEMPTION  OF  COINS  AND  CURRENCY. 

BY 

ALBERT  S.  BOLLES, 

Editor  of  the  Banker's  Magazine ,  and  author  of  “Banks  and  their 

Depositors.  ” 

The  work  contains  nineteen  chapters,  which  treat  of  the  powers  of  the  Comptroller, 
Organization,  Conversion,  and  Beginning  of  National  Banking  Associations,  their 
Extension,  Powers,  Directors,  Shareholders,  Increase  and  Reduction  of  Capital, 
Duties  of  Banks  as  Public  Depositaries,  Regulation  concerning  their  Circulations 
Interest,  Criminal  Offenses,  Preferences,  Dissolution  and  Receivership,  Examination, 
and  Reports,  Taxation  and  other  matters.  All  the  cases  which  show  the  meaning  of 
the  National  Bank  Act  are  noticed.  The  work,  therefore,  is  a  complete  exposition  of 
National  Banking  Law  to  date. 

It  contains  400  pages.  Price,  in  cloth,  $3.00 ;  full  law  sheep,  $3.75. 


Published  by  HOMANS  PUBLISHING  COMPANY,  251  Broadway. 


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